Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
1. Basis
of presentation, nature of operations and going concern
ALR
Technologies Inc. (the “Company”) was incorporated under the laws of the state of Nevada on March 24, 1987. On May 16,
2020, the Company incorporated a wholly owned subsidiary, ALR Technologies Sg Pte. Ltd. (“ALRT SG”), under the Companies
Act of Singapore. On June 9, 2021, the Company incorporated a wholly owned subsidiary, Canada Diabetes Solution Centre, Inc.,
under the Business Corporations Act of Alberta. The Company has developed its Diabetes Solution, which is a comprehensive approach
to diabetes care consisting of data collection, predictive A1C, insulin dosage adjustment suggestions, performance tracking, remote monitoring
and diabetes test supplies. The Company is seeking commercial opportunities to deploy the Diabetes Solution in the United States (“U.S.”),
Canada and Singapore.
These
consolidated financial statements have been prepared in accordance with U.S. GAAP in U.S. dollars and on a going concern basis, which
presumes the realization of assets and the discharge of liabilities and commitments in the normal course of operations for the foreseeable
future. Several adverse conditions cast substantial doubt on the validity of this assumption. The Company has incurred significant losses
over the past several fiscal years (2021 - $8,443,315; 2020 - $5,916,017), is currently unable to self-finance its operations,
has a working capital deficit of $24,312,143 (2020 - $21,760,608), accumulated deficit of $102,015,077 (2020 - $93,571,762),
limited resources, no source of operating cash flow and no assurance that sufficient funding will be available to conduct continued product
development activities. If the Company is able to finance its required product development activities, there is no assurance the Company’s
current projects will be commercially viable or profitable. The Company has debts comprised of accounts payable and accrued liabilities,
interest payable, lines of credit and promissory notes payable totaling $24,505,360 (2020 - $21,889,457) currently due, due on demand
or considered delinquent. There is no assurance that the Company will not face additional legal action from creditors regarding delinquent
accounts payable, promissory notes payable and interest payable. Any one or a combination of the above conditions could result in the
failure of the business and cause the Company to cease operations.
The
Company’s ability to continue as a going concern is dependent upon the continued financial support of its creditors and its ability
to obtain financing to fund working capital and overhead requirements, fund the development of the Company’s product line, and
ultimately, the Company’s ability to achieve profitable operations and repay overdue obligations. Management has obtained a mix
of equity and line of credit financing from related parties. The line of credit facilities have available borrowing in principal up to
$14,300,000. As of December 31, 2021, the total principal balance outstanding was $12,688,405. The resolution of whether the Company
is able to continue as a going concern is dependent upon the realization of management’s plans. There can be no assurance that
the Company will be able to raise any additional debt or equity capital from the sources described above or that the lenders in the line
of credit arrangements will maintain the availability of borrowing from the lines. If management is unsuccessful in obtaining short-term
financing or achieving long-term profitable operations, the Company will be required to cease operations.
In
March 2020, the World Health Organization declared coronavirus, COVID-19, a global pandemic. This contagious disease outbreak, which
has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies and financial
markets globally, potentially leading to an economic downturn. Management does not expect that COVID-19 will have a significant impact
on the Company; however, it could have a potential impact on the Company’s ability to raise money, market its products to attract
customers or procure equipment and parts for its glucose monitoring system.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
1. Basis
of presentation, nature of operations and going concern (continued)
All
of the Company’s debt is either due on demand or is in default, while continuing to accrue interest at its stated rate. The Company
will seek to obtain creditors’ consents to delay repayment of the outstanding promissory notes payable and related interest thereto,
until it is able to replace this financing with funds generated by operations, recapitalization with replacement debt or from equity
financings through private placements. While some of the Company’s creditors have agreed to extend repayment deadlines in the past,
there is no assurance that they will continue to do so in the future. In the past, creditors have successfully commenced legal action
against the Company to recover debts outstanding. In those instances, the Company was able to obtain financing from related parties to
cover the verdict or settlement; however, there is no assurance that the Company would be able to obtain the same financing in the future.
If the Company is unsuccessful in obtaining financing to cover any potential verdicts or settlements, the Company will be required to
cease operations.
The
Company’s activities will necessitate significant uses of working capital beyond 2022. Additionally, the Company’s capital
requirements will depend on many factors, including the success of the Company’s continued product development and distribution
efforts. The Company plans to continue financing its operations with the lines of credit it has available and other sources of financing.
On January 18, 2022, the Company filed a prospectus whereby it distributed subscription rights to its shareholders (note 14(a)).
2. Significant
accounting policies
|
a) |
Basis of consolidation |
These
consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, ALRT SG, which was incorporated
on May 16, 2020 in Singapore, and Canada Diabetes Solution Centre, Inc., which was incorporated on June 9, 2021 in Alberta,
Canada. The Canadian subsidiary is currently inactive. All significant intercompany balances and transactions have been eliminated on
consolidation.
|
b) |
Stock-based compensation |
The
Company follows the fair value method of accounting for stock-based compensation. The Company estimates the fair value of share-based
payment awards on the date of grant using an option pricing model. The value of the portion of the award that is ultimately expected
to vest is recognized as an expense over the requisite service period in the Company’s consolidated financial statements. The Company
estimates the fair value of the stock options using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires
the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
2. Significant
accounting policies (continued)
The
Company’s primary source of revenue is from subscription fees. Customers are billed in advance of the start of their subscription
and revenue is recognized ratably over each monthly subscription period. The Company is the principal in all its relationships where
partners provide monitoring services as well as testing supplies, as the Company retains control over service delivery to its customers.
Payments made to the partners, such as for marketing, where the price that the customer pays is established by the partners and is part
of the subscription, are recognized as reduction of revenue.
|
d) |
Foreign currency translation |
The
presentation currency of the Company is the U.S. dollar.
The
functional currency of each of the parent company and its subsidiaries is measured using the currency of the primary economic environment
in which that entity operates. The functional currency of ALRT SG is the Singapore dollar, for Canada Diabetes Solution Centre, Inc.
it is the Canadian dollar, and for the Company the functional currency it is the U.S. dollar.
Transactions
and balances
Foreign
currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transaction.
Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue
to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange
rate at the date when fair values were determined.
Exchange
differences arising on the translation are recognized in profit or loss in the consolidated statement of operations in the year in which
they arise.
Parent
and subsidiary companies
The
financial results and position of foreign operations whose functional currency is different from the presentation currency are translated
as follows:
|
● |
Assets and liabilities
are translated at year-end exchange rates prevailing at that reporting date; and |
|
● |
Income and expenses are
translated at monthly average exchange rates during the year. |
Exchange
differences arising on the translation of foreign operations are transferred directly to the Company’s exchange difference on translating
foreign operations in the Consolidated Statements of Operations, and are reported as a separate component of shareholders’ equity
included in “Accumulated Other Comprehensive Loss”. These differences are recognized in profit or loss in the Consolidated
Statement of Operations in the year in which they are disposed.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
2. Significant
accounting policies (continued)
Income
taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the differences
between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and
operating loss carry-forwards that are available to be carried forward to future years for tax purposes.
Deferred
income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in
tax rates is recognized in income in the period that includes the enactment date. When it is not considered to be more likely than not
that a deferred income tax asset will be realized, a valuation allowance is provided for the excess.
The
Company follows the accounting requirements associated with uncertainty in income taxes using the provisions of Financial Accounting
Standards Board Accounting Standards Codification 740 Income Taxes. Using that guidance, tax positions initially need to be recognized
in the consolidated financial statements when it is more likely than not the positions will be sustained upon examination by the tax
authorities. It also provides guidance for derecognition, classification, interest and penalties, accounting in interim periods, disclosure
and transition. As of December 31, 2021, the Company has no uncertain tax positions that qualify for either recognition or disclosure
in the consolidated financial statements.
The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements, the measurement of stock-based compensation, the fair value of financial instruments, and the reported amounts
of revenues and expenses during the reporting period. Management believes the estimates are reasonable; however, actual results could
differ from those estimates.
Basic
loss per common share is calculated by dividing net loss by the weighted average number of common shares outstanding during the year.
Diluted loss per common share is calculated by dividing the net loss by the sum of the weighted average number of common shares outstanding
and the dilutive common equivalent shares outstanding during the year. Common equivalent shares consist of the shares issuable upon exercise
of stock options and warrants calculated using the treasury stock method. Common equivalent shares are not included in the calculation
of the weighted average number of shares outstanding for diluted loss per common share when the effect would be anti-dilutive.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
2. Significant
accounting policies (continued)
|
h) |
Comprehensive income (loss) |
Comprehensive
income is the overall change in the net assets of the Company for a period, other than changes attributable to transactions with stockholders.
It is made up of net income (loss) and other comprehensive income (loss). Other comprehensive income (loss) consists of net income (loss)
and other gains and losses affecting stockholders’ equity that under U.S. GAAP are excluded from net income.
|
i) |
Fair value of financial
instruments |
The
Company’s financial instruments include cash, accounts payable, promissory notes payable, interest payable and lines of credit.
The fair values of these financial instruments approximate their carrying values due to the relatively short periods to maturity. For
fair value measurement, U.S. GAAP establishes a three-tier hierarchy that prioritizes the inputs used in the valuation methodologies
in measuring fair value:
Level
1 — observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level
2 — includes other inputs that are directly or indirectly observable in the marketplace.
Level
3 — unobservable inputs that are supported by little or no market activity.
Cash
is measured at Level 1 inputs.
j)
Recently adopted and issued accounting pronouncements
Issued
The
Company has implemented all new accounting pronouncements that are in effect and may impact its consolidated financial statements. The
Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact
on its consolidated financial position or consolidated statements of operations.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
3. Accounts
payable and accrued liabilities
A
summary of the accounts payable and accrued liabilities is as follows:
|
|
December
31,
2021 |
|
December 31,
2020 |
Accounts payable |
|
$ |
806,059 |
|
|
$ |
874,754 |
|
Accrued
liabilities |
|
|
322,087 |
|
|
|
238,966 |
|
Deferred revenue |
|
|
2,400 |
|
|
|
— |
|
Accounts
payable and accrued liabilities |
|
$ |
1,130,546 |
|
|
$ |
1,113,720 |
|
4. Interest,
advances and promissory notes payable
a) Promissory
notes payable to related parties
A
summary of activities of promissory notes payable to related parties is as follows:
Promissory
Notes Payable to Related Parties |
|
Carrying
Value |
Balance, December 31,
2019 and 2020 |
|
$ |
3,031,966 |
|
Transferred
from promissory notes payable pursuant to private transaction |
|
|
10,000 |
|
Balance, December 31,
2021 |
|
$ |
3,041,966 |
|
A
summary of the promissory notes payable to related parties is as follows:
Promissory
Notes Payable to Related Parties |
|
December 31,
2021 |
|
December 31,
2020 |
Promissory
notes payable to relatives of directors collateralized by a general security agreement over all the assets of the Company, past maturity: |
|
|
|
|
|
|
|
|
i.
Interest at 1% per month |
|
$ |
720,619 |
|
|
$ |
720,619 |
|
ii.
Interest at 1.25% per month |
|
|
51,347 |
|
|
|
51,347 |
|
iii.
Interest at the U.S. bank prime rate plus 1% |
|
|
100,000 |
|
|
|
100,000 |
|
iv.
Interest at 0.5% per month |
|
|
695,000 |
|
|
|
695,000 |
|
|
|
|
|
|
|
|
|
|
Promissory
notes payable, unsecured, to relatives of a director, bearing interest at 1% per month, past maturity |
|
|
1,475,000 |
|
|
|
1,465,000 |
|
Total
Promissory Notes Payable to Related Parties |
|
$ |
3,041,966 |
|
|
$ |
3,031,966 |
|
All
amounts past maturity continue to accrue interest at their stated rate and are considered due on demand.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
4. Interest,
advances and promissory notes payable (continued)
b) Promissory
notes payable to unrelated parties
A
summary of activities of promissory notes payable to unrelated parties is as follows:
Promissory
Notes Payable to Unrelated Parties |
|
Carrying
Value |
Balance, December 31,
2019 and 2020 |
|
$ |
2,254,353 |
|
Reclassified
to interest payable |
|
|
(10,985 |
) |
Extinguished
through issuance of shares of common stock (note 6) |
|
|
(20,000 |
) |
Transferred
to promissory notes payable pursuant to private transaction |
|
|
(10,000 |
) |
Balance, December 31,
2021 |
|
$ |
2,213,368 |
|
A
summary of the promissory notes payable to unrelated parties is as follows:
Promissory
Notes Payable to Unrelated Parties |
|
December 31,
2021 |
|
December 31,
2020 |
Unsecured
promissory notes payable to unrelated lenders, past maturity: |
|
|
|
|
|
|
|
|
i.
Interest at 1% per month |
|
$ |
1,317,456 |
|
|
$ |
1,337,456 |
|
ii.
Interest at 0.667% per month |
|
|
425,000 |
|
|
|
435,985 |
|
iii.
Interest at 0.625% per month |
|
|
150,000 |
|
|
|
150,000 |
|
iv.
Non-interest-bearing |
|
|
270,912 |
|
|
|
270,912 |
|
|
|
|
|
|
|
|
|
|
Promissory
notes payable, secured by a guarantee from the Chief Executive Officer, bearing interest at 1% per month, past maturity |
|
|
50,000 |
|
|
|
60,000 |
|
Total
Promissory Notes Payable to Unrelated Parties |
|
$ |
2,213,368 |
|
|
$ |
2,254,353 |
|
All
amounts past maturity continue to accrue interest at their stated rate and are considered due on demand.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
4. Interest,
advances and promissory notes payable (continued)
c) Interest
payable
A
summary of interest payable activity is as follows:
Interest
Payable |
|
Carrying
Value |
Balance, December 31,
2019 |
|
$ |
5,364,997 |
|
Interest
incurred on promissory notes payable |
|
|
528,871 |
|
Interest
payable retired through issuance of shares |
|
|
(2,318,542 |
) |
Balance, December 31,
2020 |
|
|
3,575,326 |
|
Reclassified
from promissory notes payable |
|
|
10,985 |
|
Interest
incurred on promissory notes payable |
|
|
527,336 |
|
Interest
payable retired through issuance of shares |
|
|
(3,000 |
) |
Balance, December 31,
2021 |
|
$ |
4,110,647 |
|
Interest
payable is due to related and unrelated parties as follows:
Interest
Payable |
|
December 31,
2021 |
|
December 31,
2020 |
Related
parties |
|
$ |
1,200,170 |
|
|
$ |
873,666 |
|
Non-related
parties |
|
|
2,910,477 |
|
|
|
2,701,660 |
|
Interest
payable |
|
$ |
4,110,647 |
|
|
$ |
3,575,326 |
|
The
payment terms, security and any interest payable are based on the underlying promissory notes payable that the Company has outstanding.
d) Interest
expense
During
the year ended December 31, 2021, the Company incurred interest expense of $5,468,328 (2020 - $2,116,466) as follows:
|
● |
$3,425,120 (2020 - $nil)
incurred related to 1) the grant of options as consideration for receiving an increase to the borrowing limit on the line of credit
between the Company and the spouse of the Chairman (note 7), and 2) the modification of options held by the Chairman and his spouse
that were granted in connection with financing provided to the Company (note 7); |
|
● |
$1,402,187 (2020 - $1,464,077)
incurred on lines of credit payable, as shown in note 5; |
|
● |
$527,336 (2020 - $528,871)
incurred on promissory notes (notes 4(a) and 4(b)); |
|
● |
$112,339 (2020 - $123,518)
incurred from the calculation of imputed interest on accounts payable outstanding for longer than one year, advances payable and
promissory notes payable, which had no stated interest rate; and |
|
● |
$1,346 (2020 - $nil) incurred
on other items. |
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
5.
Lines of credit
A
summary of lines of credit activity is as follows:
|
|
Total |
Balance, December 31,
2019 |
|
$ |
19,310,707 |
|
Advances
received on lines of credit |
|
|
820,766 |
|
Repayment
of principal borrowed on lines of credit (note 6(b)) |
|
|
(1,038,967 |
) |
Interest
incurred on lines of credit |
|
|
1,464,077 |
|
Repayment
of interest on lines of credit (note 6(b)) |
|
|
(8,642,491 |
) |
Balance, December 31,
2020 |
|
|
11,914,092 |
|
Advances
received on lines of credit |
|
|
1,149,279 |
|
Interest
incurred on lines of credit |
|
|
1,402,187 |
|
Repayment
of interest on lines of credit (note 6(b)) |
|
|
(456,725 |
) |
Balance, December 31,
2021 |
|
$ |
14,008,833 |
|
On
December 10, 2021, the Company and the spouse of the Chairman entered into an amendment agreement to increase the borrowing limit on
the line of credit provided by the spouse of the Chairman to the Company from $2,000,000 to $4,000,000. The terms of amounts to be advanced
under the amendment are consistent with the line of credit. In connection with the line of credit, the Company granted the spouse of
the Chairman the option to acquire 40,000,000 shares of common of the Company at a price of $0.05 per share until December 31, 2026 (note 7).
On
September 21, 2020, the Company, the Chairman and the Chairman’s spouse agreed to retire a portion of the principal of $1,038,967
and accrued interest of $8,642,491 pursuant to two shares for debt agreements (note 6(b)).
As
of December 31, 2021, the Company has two lines of credit as follows:
Creditor |
Interest
Rate |
Borrowing
Limit |
Repayment
Terms |
Principal
Borrowed |
Accrued
Interest |
Total
Outstanding |
Security |
Purpose |
Chairman
and CEO |
1%
per Month |
$10,300,000 |
Due
on Demand |
$10,220,700 |
$1,208,582 |
$11,429,282 |
General
Security over Assets |
General
Corporate Requirements |
Wife
of Chairman |
1%
per Month |
4,000,000 |
Due
on Demand |
2,467,705 |
111,846 |
2,579,551 |
General
Security over Assets |
General
Corporate Requirements |
Total |
|
$14,300,000 |
|
$12,688,405 |
$1,320,428 |
$14,008,833 |
|
|
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
5.
Lines of credit (continued)
As
of December 31, 2020, the Company has two lines of credit as follows:
Creditor |
Interest
Rate |
Borrowing
Limit |
Repayment
Terms |
Principal
Borrowed |
Accrued
Interest |
Total
Outstanding |
Security |
Purpose |
Chairman
and CEO |
1%
per Month |
$10,300,000 |
Due
on Demand |
$ 9,539,125 |
$314,967 |
$ 9,854,092 |
General
Security over Assets |
General
Corporate Requirements |
Wife
of Chairman |
1%
per Month |
2,000,000 |
Due
on Demand |
2,000,000 |
60,000 |
2,060,000 |
General
Security over Assets |
General
Corporate Requirements |
Total |
|
$12,300,000 |
|
$11,539,125 |
$374,967 |
$11,914,092 |
|
|
6. Capital
stock
a)
Authorized share capital
10,000,000,000
shares of common stock with a par value of $0.001 per share.
500,000,000
shares of preferred stock with a par value of $0.001 per share.
b)
Issued share capital
During
the year ended December 31, 2021:
|
i. |
On January 4, 2021, 1,000
shares of common stock were cancelled by a shareholder; no consideration was exchanged. |
|
ii. |
On April 12, 2021, the
Company elected to extend the initial 90-day period (April 22, 2021) by an additional 100-day period related to the closing of the
rights offering. The Company had until July 31, 2021 to sell the remaining 113,025,592 shares of common stock. The Company further
extended the offering period to October 29, 2021. The Company filed a post-effective amendment to further extend the rights offering
from October 29, 2021 to March 15, 2022. On such case-by-case basis, the Company will allow for the exercise of any such shareholders
until April 1, 2022. |
|
iii. |
The Company collected subscriptions
of $1,124,832 pursuant to its registration statement and issued a total of 26,496,635 shares of common stock for gross proceeds of
$1,324,832; $200,000 of the proceeds had been collected during the year ended December 31, 2020 and recognized as obligation
to issue shares. |
|
iv. |
The Company received proceeds
of $12,000 pursuant to the exercise of options to acquire 800,000 shares of common stock at a price of $0.015 per share. |
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
6. Capital
stock (continued)
|
b) |
Issued share capital (continued) |
During
the year ended December 31, 2021: (continued)
|
v. |
The Company entered into
two shares for debt agreements with two creditors to issue an aggregate 4,400,000 shares of common stock at a fair value of $0.057
per share for a purchase price of $250,800 in exchange for the retirement of $217,186 of liabilities comprised of: |
|
● |
Accounts payable |
$ |
194,186 |
|
|
● |
Promissory notes –
Principal |
$ |
20,000 |
|
|
● |
Line of credit –
Accrued interest |
$ |
3,000 |
|
The
Company recognized loss on debt settlement of $33,614. The Company also issued commitment letters to two creditors offering them an aggregate
20,000,000 shares of common stock in exchange for the extinguishment of $1,511,377 in promissory notes and interest payable prior to
December 31, 2021 (notes 8 and 14). These offer letters expired on December 31, 2021 without the parties executing any settlements.
On March 18, 2022, the Company extended the offer letters from December 31, 2021 to December 31, 2022 for the settlement of $1,541,000
in promissory notes and interest payable.
During
the year ended December 31, 2020:
|
i. |
On February 11, 2020, the
Company issued 2,000,000 restricted shares of common stock at a price of $0.04 per share with a value of $80,000 in exchange for
the retirement of $60,000 of accounts payable and $20,000 for the provision of services. |
|
ii. |
On August 24, 2020, the
Company issued 242,800 restricted shares of common stock at a price of $0.05 per share for proceeds of $12,140. |
|
iii. |
On September 21, 2020,
the Company entered into two shares for debt agreements with the Chairman and his spouse to issue an aggregate 240,000,000 restricted
shares of common stock at a price of $0.05 per share for a purchase price of $12,000,000 in exchange for the retirement of $12,000,000
of liabilities comprised of: |
|
● |
Promissory
notes – Accrued interest |
$ |
2,318,542 |
|
|
● |
Line of credit –
Accrued interest |
$ |
8,642,491 |
|
|
● |
Line of credit –
Principal |
$ |
1,038,967 |
|
|
iv. |
On December 4, 2020, the
Company filed a Form S-1 Registration Statement to distribute subscription rights to purchase up to an aggregate 127,522,227 shares
of common stock at a price of $0.05 per share for maximum aggregate offering proceeds of $6,376,111. The Company collected subscriptions
of $200,000 related to management’s right to allocate unsubscribed shares of common stock. |
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
7.
Additional paid-in capital
Stock
options
A
summary of stock option activity is as follows:
|
|
Year
Ended
December 31, 2021 |
|
Year
Ended
December 31, 2020 |
|
|
Number
of Options |
|
Weighted
Average Exercise Price |
|
Number
of Options |
|
Weighted
Average Exercise Price |
Outstanding,
beginning of year |
|
|
5,362,701,500 |
|
|
|
0.004 |
|
|
|
5,236,401,500 |
|
|
$ |
0.003 |
|
Granted |
|
|
165,000,000 |
|
|
|
0.050 |
|
|
|
139,800,000 |
|
|
$ |
0.047 |
|
Exercised |
|
|
(800,000 |
) |
|
|
(0.015 |
) |
|
|
— |
|
|
$ |
— |
|
Cancelled |
|
|
(29,900,000 |
) |
|
|
(0.034 |
) |
|
|
(13,500,000 |
) |
|
$ |
(0.034 |
) |
Outstanding, end of year |
|
|
5,497,001,500 |
|
|
|
0.006 |
|
|
|
5,362,701,500 |
|
|
$ |
0.004 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable, end of year |
|
|
5,221,701,500 |
|
|
|
0.004 |
|
|
|
5,202,701,500 |
|
|
$ |
0.003 |
|
During
the year ended December 31, 2021:
On
January 28, 2021, the Company granted the option to acquire an aggregate 32,000,000 shares of common stock at a price of $0.05 per share
to six individuals. All of the options will vest according to performance or time-based conditions. Options to acquire 22,000,000 shares
of common stock will expire December 31, 2025, and options to acquire 10,000,000 shares of common stock will expire May 17,
2024. As at December 31, 2021, 1,000,000 options have vested to date. The fair value of the options granted totals $1,706,244, of which
$573,292 relates to stock options that have time-based vesting conditions and $1,132,952 relates to stock options that have performance
vesting conditions. During the current year, $248,189 relates to the stock options with time-based vesting conditions, which was recorded.
The remaining fair value of $1,458,055 has not been recorded.
On
February 22, 2021, the Company granted the option to acquire an aggregate 5,000,000 shares of common stock at a price of $0.05 per share.
These options were granted to three individuals and have an expiry date of May 17, 2024. None of these options have vested to date. The
fair value of the options granted totals $225,141. During the current year, $57,730 related to stock options with time-based vesting
conditions was recognized. The remaining fair value of $167,411 has not been recorded.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
7.
Additional paid-in capital (continued)
Stock
options (continued)
During
the year ended December 31, 2021: (continued)
On
April 14, 2021, the Company’s Board of Directors approved the grant of the option to acquire an aggregate 28,500,000 shares of
common stock at a price of $0.05 per share until December 31, 2025 to five individuals. All of the options will vest according to
performance or time-based conditions; 200,000 options have vested to date. The fair value of the options granted totals $1,565,812, of
which $351,621 relates to stock options that have time-based vesting conditions and $1,214,191 relates to stock options that have performance
vesting conditions. During the current year, $88,540 related to the stock options with time-based vesting conditions was recognized.
The remaining fair value of $1,477,272 has not been recorded.
On
May 12, 2021, the Company’s Board of Directors amended the option to acquire 2,000,000 shares, previously granted on January 28,
2021 to a consultant, to increase the option by 1,000,000 to provide the optionee the option to acquire an aggregate 3,000,000 shares
of common stock at a price of $0.05 per share until December 31, 2025. All other terms of the January 28, 2021 grant remain the
same and the options are subject to performance vesting conditions. The fair value of the additional 1,000,000 amended options granted
totaling $54,940 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be
met.
On
May 31, 2021, the Company granted one consultant the option to acquire 5,000,000 shares of common stock of the Company at a price of
$0.05 per share until December 31, 2025 subject to performance vesting conditions. The fair value of the options granted totaling
$254,708 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.
On
June 27, 2021, the Company cancelled 7,400,000 stock options with an average exercise price of $0.033.
On
June 27, 2021, the Company’s Board of Directors approved the grant of the option to acquire an aggregate 21,000,000 shares of common
stock at a price of $0.05 per share until June 30, 2026 to four individuals. All of the options will vest according to performance
or time-based conditions. The fair value of the options granted totals $1,374,208, of which $26,175 relates to stock options that have
time-based vesting conditions and $1,348,033 relates to stock options that have performance vesting conditions. During the current year,
$9,816 related to the stock options with time-based vesting conditions was recognized. The remaining fair value of $1,364,392 has not
been recorded.
On
June 30, 2021, the Company amended the option to acquire 4,365,001,300 shares of common stock granted on July 1, 2016 by extending
the expiry date from July 1, 2021 to April 12, 2024. The options were granted in connection with lines of credit provided by
the Chairman and his spouse, which are currently outstanding (note 5). All of the options had vested in previous years. The fair
value of the amendments totaled $1,287,834 and was recorded during the current period in interest expense.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
7.
Additional paid-in capital (continued)
Stock
options (continued)
During
the year ended December 31, 2021: (continued)
Effective
July 22, 2021, the Company cancelled 22,500,000 stock options exercisable at $0.035 related to the termination of certain contractors
and advisors.
On
August 27, 2021, the Company granted a member of the Board of Directors the option to acquire 5,000,000 shares of common stock at a price
of $0.05 per share until June 30, 2026. The fair value of the options granted totaling $304,692 was fully recorded at grant.
On
October 4, 2021, the Company granted two individuals the option to acquire an aggregate 17,500,000 options at an exercise price of $0.05
per share until September 30, 2026; 15,000,000 of the options will vest according to time-based conditions and 2,500,000 will vest
according to performance conditions. None of the options have vested to date. The fair value of the options granted totals $1,043,690,
of which $894,592 relates to stock options that have time-based vesting conditions and $149,098 relates to stock options that have performance
vesting conditions. During the current year, $101,758 related to the stock options with time-based vesting conditions was recognized.
The remaining fair value of $941,932 has not been recorded.
On
December 10, 2021, the Company granted one creditor the option to acquire 40,000,000 shares of common stock of the Company at a price
of $0.05 per share until December 31, 2026 in connection with receiving line of credit financing (note 5). The fair value of
the options granted totaled $2,137,286 and was fully recorded upon the Company entering into the financing agreement with the creditor.
On
December 10, 2021, the Company granted one consultant the option to acquire 10,000,000 shares of common stock of the Company at a price
of $0.05 per share until December 31, 2026 subject to performance vesting conditions. The fair value of the options granted totaling
$534,321 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.
During
the year ended December 31, 2021, the Company recorded a further $167,373 in compensation expense related to the vesting of stock
options granted in previous years.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
7.
Additional paid-in capital (continued)
Stock
options (continued)
During
the year ended December 31, 2020:
On
April 1, 2020, the Company granted one consultant the option to acquire 10,000,000 shares of common stock at a price of $0.035 per share
for a term of five years. The fair value of the options granted totaling $391,843 was fully recorded at grant.
On
May 12, 2020, the Company amended the option to acquire 40,000,000 shares of common stock granted on June 12, 2019 to extend the period
of vesting from May 31, 2020 to December 31, 2020. None of these options have vested to date.
On
May 18, 2020, the Company granted one consultant the option to acquire 500,000 shares of common stock of the Company at a price of $0.035
per share until May 17, 2024. The fair value of the options granted totaling $18,725 was fully recorded at grant.
On
June 1, 2020, the Company granted one consultant the option to acquire 10,000,000 shares of common stock of the Company at a price of
$0.035 per share until May 31, 2025 subject to performance vesting conditions. The fair value of the options granted totaling $621,853
was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.
On
June 5, 2020, the Company granted one sales agent the option to acquire 10,000,000 shares of common stock of the Company at a price of
$0.035 per share until May 31, 2025 subject to the agent enrolling 20,000 patients into the ALRT Diabetes Solution by May 31, 2021. The
fair value of the options granted totaling $494,868 was not recorded, as it cannot be determined that it is more likely than not that
the performance condition will be met.
On
September 1, 2020, the Company granted 13 individuals the option to acquire an aggregate 74,500,000 options at an exercise price of $0.05
per share; 22,000,000 stock options, which vested at the time of grant, will expire on May 17, 2024 and 52,500,000 stock options, which
vest upon achievement of performance conditions, will expire on May 31, 2025. None of the stock options with performance vesting conditions
have vested. The fair value of the options granted totals $3,854,619, of which $1,137,397 related to the stock options that have vested
was recorded and $2,717,222 related to the options that have not vested was not recorded.
On
October 12, 2020, the Company granted eight individuals the option to acquire an aggregate 34,800,000 options at an exercise price of
$0.05 per share until May 31, 2025; 18,300,000 vested at the time of grant and 16,500,000 of the stock options granted will vest upon
achievement of performance conditions. None of the stock options with performance vesting conditions had vested as at December 31, 2020
and 1,000,000 vested during the year ended December 31, 2021. The fair value of the options granted totaled $2,434,053, of which $1,279,973
related to the stock options that have vested was recorded and $1,154,080 related to the options that have not vested was not recorded.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
7.
Additional paid-in capital (continued)
Stock
options (continued)
During
the year ended December 31, 2020: (continued)
During
the year ended December 31, 2020, the Company recorded a further $79 in compensation expense relating to the vesting of stock options
granted in previous years.
Outstanding
The
options outstanding at December 31, 2021 and 2020 were as follows:
|
|
December 31, 2021 |
|
December 31, 2020 |
Expiry Date |
|
Options |
|
Exercise Price |
|
Intrinsic Value |
|
Options |
|
Exercise Price |
|
Intrinsic Value |
July 1, 2021 |
|
|
— |
|
|
$ |
0.002 |
|
|
|
0.058 |
|
|
|
4,365,001,300 |
|
|
$ |
0.002 |
|
|
$ |
0.069 |
|
November 27, 2022 |
|
|
5,600,000 |
|
|
$ |
0.015 |
|
|
|
0.045 |
|
|
|
6,950,000 |
|
|
$ |
0.015 |
|
|
$ |
0.056 |
|
January 31, 2023 |
|
|
40,500,000 |
|
|
$ |
0.015 |
|
|
|
0.045 |
|
|
|
40,500,000 |
|
|
$ |
0.015 |
|
|
$ |
0.056 |
|
June 13, 2023 |
|
|
5,000,000 |
|
|
$ |
0.015 |
|
|
|
0.045 |
|
|
|
5,000,000 |
|
|
$ |
0.015 |
|
|
$ |
0.056 |
|
October 1, 2023 |
|
|
— |
|
|
$ |
0.050 |
|
|
|
0.010 |
|
|
|
300,000 |
|
|
$ |
0.050 |
|
|
$ |
0.021 |
|
February 3, 2024 |
|
|
— |
|
|
$ |
0.035 |
|
|
|
0.025 |
|
|
|
10,000,000 |
|
|
$ |
0.035 |
|
|
$ |
0.036 |
|
March 14, 2024 |
|
|
6,650,000 |
|
|
$ |
0.035 |
|
|
|
0.025 |
|
|
|
9,150,000 |
|
|
$ |
0.035 |
|
|
$ |
0.036 |
|
April 12, 2024 |
|
|
4,925,001,500 |
|
|
$ |
0.002 |
|
|
|
0.058 |
|
|
|
560,000,200 |
|
|
$ |
0.002 |
|
|
$ |
0.069 |
|
April 12, 2024 |
|
|
3,350,000 |
|
|
$ |
0.015 |
|
|
|
0.045 |
|
|
|
3,900,000 |
|
|
$ |
0.015 |
|
|
$ |
0.056 |
|
April 12, 2024 |
|
|
200,000 |
|
|
$ |
0.030 |
|
|
|
0.030 |
|
|
|
200,000 |
|
|
$ |
0.030 |
|
|
$ |
0.041 |
|
May 6, 2024 |
|
|
13,000,000 |
|
|
$ |
0.035 |
|
|
|
0.025 |
|
|
|
13,000,000 |
|
|
$ |
0.035 |
|
|
$ |
0.036 |
|
May 17, 2024 |
|
|
77,000,000 |
|
|
$ |
0.050 |
|
|
|
0.010 |
|
|
|
62,000,000 |
|
|
$ |
0.050 |
|
|
$ |
0.021 |
|
May 17, 2024 |
|
|
19,400,000 |
|
|
$ |
0.035 |
|
|
|
0.025 |
|
|
|
25,400,000 |
|
|
$ |
0.035 |
|
|
$ |
0.036 |
|
June 17, 2024 |
|
|
5,000,000 |
|
|
$ |
0.050 |
|
|
|
0.010 |
|
|
|
5,000,000 |
|
|
$ |
0.050 |
|
|
$ |
0.021 |
|
June 17, 2024 |
|
|
— |
|
|
$ |
0.035 |
|
|
|
0.025 |
|
|
|
5,000,000 |
|
|
$ |
0.035 |
|
|
$ |
0.036 |
|
August 16, 2024 |
|
|
2,500,000 |
|
|
$ |
0.050 |
|
|
|
0.010 |
|
|
|
2,500,000 |
|
|
$ |
0.050 |
|
|
$ |
0.021 |
|
September 6, 2024 |
|
|
1,000,000 |
|
|
$ |
0.050 |
|
|
|
0.010 |
|
|
|
1,000,000 |
|
|
$ |
0.050 |
|
|
$ |
0.021 |
|
September 17, 2024 |
|
|
— |
|
|
$ |
0.035 |
|
|
|
0.025 |
|
|
|
5,000,000 |
|
|
$ |
0.035 |
|
|
$ |
0.036 |
|
October 3, 2024 |
|
|
3,500,000 |
|
|
$ |
0.035 |
|
|
|
0.025 |
|
|
|
3,500,000 |
|
|
$ |
0.035 |
|
|
$ |
0.036 |
|
October 24, 2024 |
|
|
2,000,000 |
|
|
$ |
0.035 |
|
|
|
0.025 |
|
|
|
2,000,000 |
|
|
$ |
0.035 |
|
|
$ |
0.036 |
|
December 11, 2024 |
|
|
120,000,000 |
|
|
$ |
0.015 |
|
|
|
0.045 |
|
|
|
120,000,000 |
|
|
$ |
0.015 |
|
|
$ |
0.056 |
|
April 1, 2025 |
|
|
10,000,000 |
|
|
$ |
0.035 |
|
|
|
0.025 |
|
|
|
10,000,000 |
|
|
$ |
0.035 |
|
|
$ |
0.036 |
|
May 31, 2025 |
|
|
20,000,000 |
|
|
$ |
0.035 |
|
|
|
0.025 |
|
|
|
20,000,000 |
|
|
$ |
0.035 |
|
|
$ |
0.036 |
|
May 31, 2025 |
|
|
87,300,000 |
|
|
$ |
0.050 |
|
|
|
0.010 |
|
|
|
87,300,000 |
|
|
$ |
0.050 |
|
|
$ |
0.021 |
|
December 31, 2025 |
|
|
56,500,000 |
|
|
$ |
0.050 |
|
|
|
0.010 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
June 30, 2026 |
|
|
26,000,000 |
|
|
$ |
0.050 |
|
|
|
0.010 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
September 30, 2026 |
|
|
17,500,000 |
|
|
$ |
0.050 |
|
|
|
0.010 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
December 31, 2026 |
|
|
50,000,000 |
|
|
$ |
0.050 |
|
|
|
0.010 |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
Total |
|
|
5,497,001,500 |
|
|
$ |
0.006 |
|
|
|
0.054 |
|
|
|
5,362,701,500 |
|
|
$ |
0.004 |
|
|
$ |
0.066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Remaining Contractual Life |
|
|
|
|
|
|
2.37 |
|
|
|
|
|
|
|
|
|
|
|
1.05 |
|
|
|
|
|
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
7.
Additional paid-in capital (continued)
Stock
options (continued)
The
fair value of the stock options granted and vested was allocated as follows:
|
|
December
31, 2021 |
|
December
31, 2020 |
Interest
expense |
|
$ |
3,425,120 |
|
|
$ |
— |
|
Product
development expense |
|
|
222,178 |
|
|
|
1,156,195 |
|
Professional
expense |
|
|
169,382 |
|
|
|
741,564 |
|
Selling,
general and administration expenses |
|
|
586,538 |
|
|
|
930,258 |
|
Fair
value of the stock options granted |
|
$ |
4,403,218 |
|
|
$ |
2,828,017 |
|
The
Company uses the fair value method for determining stock-based compensation for all options granted during the fiscal periods. The fair
value was determined using the Black-Scholes option pricing model based on the following weighted average assumptions:
|
|
December
31, 2021 |
|
December
31, 2020 |
Risk-free
interest rate |
|
|
0.87 |
% |
|
|
0.20 |
% |
Expected
life |
|
|
4.8 years |
|
|
|
4.6 years |
|
Expected
dividends |
|
|
0 |
% |
|
|
0 |
% |
Expected
volatility |
|
|
278 |
% |
|
|
312 |
% |
Forfeiture
rate |
|
|
0 |
% |
|
|
0 |
% |
The
weighted average fair value for the options granted during 2021 was $0.06 (2020 - $0.06).
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
8. Related
party transactions and balances
|
|
Year
Ended December 31, 2021 |
|
Year
Ended December 31, 2020 |
Related party transactions
included within interest expense: |
|
|
|
|
|
|
|
|
Interest
expense on promissory notes issued to relatives of the Chairman and Chief Executive Officer of the Company |
|
$ |
316,504 |
|
|
$ |
315,926 |
|
Interest
expense on lines of credit payable to the Chairman and Chief Executive Officer of the Company and his spouse |
|
$ |
1,402,187 |
|
|
$ |
1,464,077 |
|
Interest
expense related to the modification of stock options held by the Chairman and Chief Executive Officer of the Company and his spouse
related to financing provided |
|
$ |
1,287,834 |
|
|
$ |
— |
|
Interest
expense related to stock options granted to the spouse of the Chairman and Chief Executive Officer of the Company related to the
increase of the borrowing limit of a line of credit |
|
$ |
2,137,286 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Related party transactions
included within selling, general and administration expenses: |
|
|
|
|
|
|
|
|
Consulting
fees to the Chairman and Chief Executive Officer of the Company accrued on the line of credit available to the Company |
|
$ |
249,600 |
|
|
$ |
249,600 |
|
Salary
for services as VP Corporate and Director of the Singapore subsidiary to the spouse of the Chairman and Chief Executive Officer of
the Company |
|
$ |
33,427 |
|
|
$ |
— |
|
Rent
paid to a company controlled by the spouse of the Chairman and immediate family members |
|
$ |
24,390 |
|
|
$ |
— |
|
Stock
options granted to a member of the Board of Directors of the Company |
|
$ |
304,692 |
|
|
$ |
— |
|
Loss
on settlement of debt to a relative of the Chairman and Chief Executive Officer of the Company |
|
$ |
16,800 |
|
|
$ |
— |
|
Interest
on promissory notes payable, interest on lines of credit payable to related parties, management compensation and compensation paid to
a relative of a director have been recorded at the exchange amount, which is the amount agreed to by the parties. Stock options granted
to related parties and modification of stock options held by related parties have been recorded at their estimated fair value.
The
Company also issued commitment letters to two creditors who are relatives of the Chairman and Chief Executive Officer of the Company
offering them an aggregate 20,000,000 shares of common stock in exchange for the extinguishment of $1,511,377 in promissory notes and
interest payable prior to December 31, 2021 (notes 6(b)(v) and 14). These offer letters expired on December 31, 2021 without
the parties executing any settlements. On March 18, 2022, the Company extended the offer letters from December 31, 2021 to December 31,
2022 for the settlement of $1,541,000 in promissory notes and interest payable.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
9. Commitments
and contingencies
a)
Contingencies
The
Company has had three judgments against it relating to overdue promissory notes and accrued interest, and a fourth creditor has demanded
repayment of an overdue promissory note and accrued interest. To date, the Company has not repaid any of these promissory notes and related
accrued interest and could be subject to further action. The legal liability, totaling $1,253,182, of these promissory notes and related
accrued interest have been fully recognized and recorded by the Company. The Company has accrued interest of $279,457 related to one
of these promissory notes.
On
December 22, 2020, a default judgment was entered against the Company in regard to one of the above noted judgments totaling $551,576,
consisting of the principal amount of $300,000 and accrued interest of $251,576, as of the date of the Civil Summons.
b)
Commitments
The
Company has a consulting arrangement with Mr. Sidney Chan, Chief Executive Officer and Chairman of the Board of Directors of the Company.
Under the terms of the contract, Mr. Chan will be paid $240,000 per annum for services as Chief Executive Officer. The contract can be
terminated at any time with thirty days’ notice and the payment of two years’ annual salary. Should the contract be terminated,
all debts owed to Mr. Chan and his spouse must be immediately repaid. The initial term of the contract is for one year and automatically
renews for continuous one-year terms. Also, under the terms of the contract are the following:
|
1) |
Incentive revenue bonus |
Mr.
Chan will be entitled to a 1% net sales commission from the sales of any of the Company’s products at any time during his life,
regardless if Mr. Chan is still under contract with the Company.
If
more than 50% of the Company’s stock or assets are sold, Mr. Chan will be compensated for entering into non-compete agreements
based on the selling price of the Company or its assets as follows:
|
i. |
2% of sales price up to
$24,999,999 plus |
|
ii. |
3% of sales price between
$25,000,000 and $49,999,999 plus |
|
iii. |
4% of sales price between
$50,000,000 and $199,999,999 plus |
|
iv. |
5% of sales price in excess
of $200,000,000. |
The
Company has a lease agreement for the Singapore office with remaining obligation of $24,450.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
10. Financial
instruments
The
Company’s financial instruments consist of cash, accounts payable, interest payable, promissory notes payable to unrelated parties,
promissory notes payable to related parties and lines of credit from related parties.
The
fair values of cash and certain accounts payable approximate their carrying values due to the relatively short periods to maturity of
these instruments.
Certain
accounts payable have been outstanding longer than one year. The Company has recorded imputed interest at a rate of 1% per month over
the period the payables have been outstanding for longer than one year, with a corresponding amount recognized in additional paid-in
capital. The calculated amount represents the implicit compensation for the use of funds beyond a reasonable term for regular trade payables.
For
the purposes of fair value analysis, promissory notes payable to related parties and promissory notes payable to unrelated parties can
be separated into two classes of financial liabilities:
|
i. |
Interest-bearing promissory
notes, lines of credit and related interest payable; and |
|
ii. |
Non-interest-bearing promissory
notes past due. |
The
interest-bearing promissory notes payable are all delinquent and have continued to accrue interest at their stated rates. The Company
currently does not have the funds to extinguish these debts and will continue to incur interest until such time as the liabilities are
extinguished. There is not an active market for delinquent loans for a Company with a similar financial position. Management asserts
the carrying values of the promissory notes and related interest payable are a reasonable estimate of fair value, as they represent the
Company’s best estimate of their legal obligation for these debts. As there is no observable market for interest rates on similar
promissory notes, the fair value was estimated using Level 2 inputs in the fair value hierarchy.
The
Company has one non-interest-bearing promissory note payable past due. There is not an active market for default loans not bearing interest
nor is there an observable market for lending to companies with a financial position similar to the Company. The Company has recorded
imputed interest at a rate of 1% per month over the life of the promissory notes, with a corresponding amount recognized in additional
paid-in capital representing the implicit compensation for the use of funds. Management asserts the payment date for these amounts cannot
be reasonably determined. Management further asserts there is not a determinable interest rate for arm’s length borrowings based
on the current financial position of the Company and asserts the carrying value is the best estimate of the Company’s legal liability
and represents the fair value for the promissory note. This would be considered a Level 2 input in the fair value hierarchy.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
10. Financial
instruments (continued)
The
financial instrument that potentially subjects the Company to credit risk consists of cash. The Company only has an immaterial cash balance
and is not exposed to significant credit risk.
Market
risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. Market
risk comprises two types of risk: interest rate risk and foreign currency risk.
Interest
rate risk consists of two components:
To
the extent that payments made or received on the Company’s monetary assets and liabilities are affected by changes in the prevailing
market interest rates, the Company is exposed to interest rate cash flow risk.
The
Company is exposed to interest rate cash flow risk on promissory notes payable of $500,000, which incur a variable interest rate of prime
plus 1%. A hypothetical change of 1% on interest rates would increase or decrease net loss and comprehensive loss by $5,000.
To
the extent that changes in prevailing market interest rates differ from the interest rate on the Company’s monetary assets and
liabilities, the Company is exposed to price risk.
The
Company’s promissory notes payable consist of $100,000 of variable interest rate notes and $5,155,334 of fixed interest rate notes.
All of these notes are past due and are currently due on demand while interest continues to accrue. Due to the delinquency of the fixed
interest rate promissory notes payable, there is no active market for these instruments and fluctuations in market interest rates do
not have a significant impact on their estimated fair values as of December 31, 2021.
At
December 31, 2021, the effect on net loss and comprehensive loss of a hypothetical change of 1% in market interest rate cannot be
reasonably determined.
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
10. Financial
instruments (continued)
|
c) |
Market risk (continued) |
|
ii. |
Foreign currency risk |
The
Company incurs certain accounts payable and expenses in Canadian and Singapore dollars and is exposed to fluctuations in changes in exchange
rates between the U.S. and Canadian dollars, as well as U.S. and Singapore dollars. As at December 31, 2021, the effect on net loss
and comprehensive loss of a hypothetical change of 10% between the U.S. and Canadian dollars and between the U.S. and Singapore dollars
would not be material. The Company has not entered into any foreign currency contracts to mitigate risk.
11. Income
taxes
The
provision for income taxes differs from the result that would be obtained by applying the statutory tax rate of 21% (2020 - 21%)
to income (loss) before income taxes. The difference results from the following items:
|
|
Year
Ended
December 31,
2021 |
|
Year
Ended
December 31,
2020 |
Computed
expected benefit of income taxes |
|
$ |
(1,773,096 |
) |
|
$ |
(1,242,363 |
) |
Stock-based
compensation |
|
|
925,449 |
|
|
|
593,885 |
|
Non-deductible
interest expense |
|
|
334,556 |
|
|
|
79,418 |
|
Expiry
of tax credits |
|
|
773,050 |
|
|
|
929,432 |
|
True
up of prior year balances |
|
|
99,348 |
|
|
|
1,214,608 |
|
Increase
(decrease) in valuation allowance |
|
|
(359,307 |
) |
|
|
(1,574,980 |
) |
Income
tax provision |
|
$ |
— |
|
|
$ |
— |
|
The
components of the net deferred income tax asset, the statutory tax rate and the amount of the valuation allowance are as follows:
|
|
Year
Ended
December 31,
2021 |
|
Year
Ended
December 31,
2020 |
Net
operating loss carried forward |
|
$ |
35,414,853 |
|
|
$ |
37,125,837 |
|
Tax
rate |
|
|
21 |
% |
|
|
21 |
% |
Deferred
income tax assets |
|
|
7,437,119 |
|
|
|
7,796,426 |
|
Valuation
allowance |
|
|
(7,437,119 |
) |
|
|
(7,796,426 |
) |
Net
deferred income tax asset |
|
$ |
— |
|
|
$ |
— |
|
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
11. Income
taxes (continued)
The
potential benefit of the deferred income tax asset has not been recognized in these consolidated financial statements since it cannot
be assured that it is more likely than not that such benefit will be utilized in future years. The Company believes that the available
objective evidence creates sufficient uncertainty regarding the realizability of the deferred income tax assets such that a full valuation
allowance has been recorded.
The
operating losses amounting to $35,414,000 for utilization in the United States, the jurisdiction where they were incurred, will expire
between 2022 and 2041 if they are not used. The following table lists the fiscal year in which the loss was incurred and the expiration
date of the operating loss carryforwards:
Fiscal
Year |
Amount |
Expiry
Date |
2002 |
|
2,504,000 |
2022 |
2003 |
$ |
2,776,000 |
2023 |
2004 |
|
1,251,000 |
2024 |
2005 |
|
1,304,000 |
2025 |
2006 |
|
1,532,000 |
2026 |
2007 |
|
1,480,000 |
2027 |
2008 |
|
1,600,000 |
2028 |
2009 |
|
1,723,000 |
2029 |
2010 |
|
823,000 |
2030 |
2011 |
|
1,747,000 |
2031 |
2012 |
|
1,638,000 |
2032 |
2013 |
|
1,403,000 |
2033 |
2014 |
|
2,595,000 |
2034 |
2015 |
|
1,619,000 |
2035 |
2016 |
|
1,171,000 |
2036 |
2017 |
|
928,000 |
2037 |
2018 |
|
720,000 |
2038 |
2019 |
|
3,921,000 |
2039 |
2020 |
|
2,236,000 |
2040 |
2021 |
|
2,443,000 |
2041 |
Total |
$ |
35,414,000 |
|
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
12.
Operating segments
The
Company has one operating segment, development of diabetes hardware and software. The Company’s geographical segments are summarized
as follows:
|
|
December
31,
2021 |
|
December
31,
2020 |
|
|
|
|
|
Current
and Total Assets |
|
|
|
|
|
|
|
|
Other |
|
$ |
9,547 |
|
|
$ |
7,632 |
|
Singapore |
|
|
110,527 |
|
|
|
20,000 |
|
United States |
|
|
73,143 |
|
|
|
101,217 |
|
|
|
$ |
193,217 |
|
|
$ |
128,849 |
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
Other |
|
$ |
— |
|
|
$ |
— |
|
Singapore |
|
|
7,468 |
|
|
|
— |
|
United States |
|
|
— |
|
|
|
— |
|
|
|
$ |
7,468 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Net
Loss |
|
|
|
|
|
|
|
|
Other |
|
$ |
(36 |
) |
|
$ |
— |
|
Singapore |
|
|
(195,308 |
) |
|
|
— |
|
United States |
|
|
(8,247,971 |
) |
|
|
(5,916,017 |
) |
|
|
$ |
(8,443,315 |
) |
|
$ |
(5,916,017 |
) |
|
|
|
|
|
|
|
|
|
13.
Supplemental information with respect to cash flows
|
|
Year
Ended
December 31,
2021 |
|
Year
Ended
December 31,
2020 |
Common stock
issued to retire accounts payable |
|
$ |
194,186 |
|
|
$ |
60,000 |
|
Common stock issued to
retire interest payable |
|
$ |
3,000 |
|
|
$ |
2,318,542 |
|
Common stock issued to
retire promissory notes payable |
|
$ |
20,000 |
|
|
|
— |
|
Common stock issued to
retire line of credit payable |
|
$ |
— |
|
|
$ |
9,681,458 |
|
14. Subsequent
events
|
a) |
On January 18, 2022, the
Company issued a prospectus whereby it distributed 101,025,592 subscription rights to its shareholders to purchase shares of common
stock of the Company at a price of $0.05 per share. The rights were set to expire on February 18, 2022, subsequently extended to
March 15, 2022, after which time management has 150 days to allocate the rights to other parties. On such case-by-case basis, the
Company will allow for the exercise of any such shareholders until April 1, 2022. If fully exercised, this may provide financing
of approximately $5,000,000 to the Company. |
ALR
TECHNOLOGIES INC.
Notes
to Consolidated Financial Statements
For
the Years Ended December 31, 2021 and 2020
($
United States)
14. Subsequent
events (continued)
|
b) |
On March 18, 2022, the
Company extended the commitment letters previously issued to two creditors who are relatives of the Chairman and Chief Executive
Officer of the Company offering them an aggregate 20,000,000 shares of common stock in exchange for the extinguishment of $1,541,000
in promissory notes and interest payable (notes 6(b)(v) and 8) from December 31, 2021 to December 31, 2022. |
|
c) |
On March 18, 2022, the
Company modified 70,000,000 options previously granted to a number of advisors and independent contractors by extending the vesting
period under vesting terms, which have not been met, from September 30, 2021 and December 31, 2021 to December 31,
2022 and from June 30, 2022 to June 30, 2023. |
|
d) |
On March 18, 2022, the
Company modified 2,500,000 options previously granted to an individual on October 4, 2021 by modifying the vesting terms of 1,000,000
options from performance conditions to immediately vesting and cancelling the remaining 1,500,000 options. |
|
e) |
Effective March 18, 2022,
the Company cancelled 20,000,000 stock options exercisable at $0.015, 10,000,000 stock options exercisable at $0.035 and 28,500,000
exercisable at $0.05 related to the termination of certain contractors. |
|
|
|
|
f) |
The Company received an
advance from a shareholder for US$200,000 which will mature and be repayable on July 31, 2022. |
ALR
TECHNOLOGIES INC.
Condensed
Consolidated Financial Statements
June
30, 2022 and 2021
(unaudited)
Index |
Page |
|
|
Condensed Consolidated Balance Sheets as of June 30,
2022 and December 31, 2021 |
F-36 |
|
|
Condensed Consolidated
Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021 |
F-37 |
|
|
Condensed Consolidated
Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 |
F-38 |
|
|
Notes to Condensed Consolidated
Financial Statements |
F-39-54 |
ALR
TECHNOLOGIES INC.
Condensed
Consolidated Balance Sheets
($
United States)
|
|
June
30,
2022 |
|
December
31,
2021 |
|
|
|
(Unaudited) |
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash |
|
$ |
8,996 |
|
|
$ |
115,922 |
|
Prepaid
expenses |
|
|
87,331 |
|
|
|
77,295 |
|
Total
assets |
|
$ |
96,327 |
|
|
$ |
193,217 |
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders’ Deficit |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities |
|
$ |
1,330,196 |
|
|
$ |
1,130,546 |
|
Promissory
notes payable to related parties |
|
|
3,091,966 |
|
|
|
3,041,966 |
|
Promissory
notes payable to unrelated parties |
|
|
2,457,726 |
|
|
|
2,213,368 |
|
Interest
payable |
|
|
4,388,068 |
|
|
|
4,110,647 |
|
Lines
of credit from related parties |
|
|
15,087,038 |
|
|
|
14,008,833 |
|
Total
liabilities |
|
|
26,354,994 |
|
|
|
24,505,360 |
|
|
|
|
|
|
|
|
|
|
Stockholders’
Deficit |
|
|
|
|
|
|
|
|
Preferred
stock: |
|
|
|
|
|
|
|
|
Authorized:
500,000,000 shares of preferred stock (December 31, 2021 – 500,000,000) with a par value of $0.001 per share |
|
|
|
|
|
|
|
|
Shares
issued and outstanding: Nil shares of preferred stock (December 31, 2021 – Nil) were issued and outstanding |
|
|
|
|
|
|
— |
|
Common
stock: |
|
|
|
|
|
|
|
|
Authorized:
10,000,000,000 shares of common stock (December 31, 2021 – 10,000,000,000) with a par value of $0.001 per share |
|
|
|
|
|
|
|
|
Shares
issued and outstanding: 551,966,844 shares of common stock (December 31, 2021 – 542,716,344) |
|
|
551,966 |
|
|
|
542,716 |
|
Additional
paid-in capital |
|
|
78,103,332 |
|
|
|
77,171,627 |
|
Accumulated
other comprehensive loss – cumulative translation differences |
|
|
(6,273 |
) |
|
|
(11,409 |
) |
Accumulated
deficit |
|
|
(104,907,692 |
) |
|
|
(102,015,077 |
) |
Total
stockholders’ deficit |
|
|
(26,258,667 |
) |
|
|
(24,312,143 |
) |
Total
liabilities and stockholders’ deficit |
|
$ |
96,327 |
|
|
$ |
193,217 |
|
|
|
|
|
|
|
|
|
|
Basis
of presentation, nature of operations and going concern (note 1)
Subsequent
events (note 11)
See
accompanying notes to the condensed consolidated financial statements.
ALR
TECHNOLOGIES INC.
Condensed
Consolidated Statements of Operations
($
United States)
(Unaudited)
|
|
Three
Months Ended
June
30, |
|
Six
Months Ended
June
30, |
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
980 |
|
|
$ |
— |
|
|
$ |
2,023 |
|
|
$ |
— |
|
Cost
of revenue |
|
|
(444 |
) |
|
|
— |
|
|
|
(1,038 |
) |
|
|
— |
|
Gross
margin |
|
|
536 |
|
|
|
— |
|
|
|
985 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
development costs |
|
|
121,551 |
|
|
|
128,157 |
|
|
|
249,771 |
|
|
|
240,199 |
|
Professional
fees |
|
|
352,943 |
|
|
|
138,890 |
|
|
|
524,560 |
|
|
|
356,118 |
|
Selling,
general and administrative expenses |
|
|
454,680 |
|
|
|
215,466 |
|
|
|
1,009,505 |
|
|
|
423,752 |
|
Operating
Loss |
|
|
929,174 |
|
|
|
482,513 |
|
|
|
1,783,836 |
|
|
|
1,020,069 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before other items |
|
|
(928,638 |
) |
|
|
(482,513 |
) |
|
|
(1,782,851 |
) |
|
|
(1,020,069 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Items |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(559,128 |
) |
|
|
(1,804,403 |
) |
|
|
(1,109,764 |
) |
|
|
(2,283,770 |
) |
Loss
on settlement of debt |
|
|
— |
|
|
|
(33,614 |
) |
|
|
— |
|
|
|
(33,614 |
) |
Total
Other Items |
|
|
(559,128 |
) |
|
|
(1,838,017 |
) |
|
|
(1,109,764 |
) |
|
|
(2,317,384 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss |
|
|
(1,487,766 |
) |
|
|
(2,320,530 |
) |
|
|
(2,892,615 |
) |
|
|
(3,337,453 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange
difference on translating foreign operations |
|
|
6,067 |
|
|
|
— |
|
|
|
5,136 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
loss for the period |
|
$ |
(1,481,699 |
) |
|
$ |
(2,320,530 |
) |
|
$ |
(2,887,479 |
) |
|
$ |
(3,337,453 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average number of shares of common stock outstanding, basic and diluted |
|
|
545,491,844 |
|
|
|
532,676,344 |
|
|
|
544,104,125 |
|
|
|
527,072,440 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
per share, basic and diluted |
|
$ |
(0.00 |
) |
|
$ |
(0.00 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to the condensed consolidated financial statements.
ALR
TECHNOLOGIES INC.
Condensed
Consolidated Statements of Cash Flows
($
United States)
(Unaudited)
|
|
Six
Months Ended
June 30, |
|
|
2022 |
|
2021 |
|
|
|
|
|
OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(2,892,615 |
) |
|
$ |
(3,337,453 |
) |
Stock-based
compensation-product development costs |
|
|
118,586 |
|
|
|
97,842 |
|
Stock-based
compensation-selling, general and administrative |
|
|
382,157 |
|
|
|
— |
|
Stock-based
compensation-professional fees |
|
|
17,916 |
|
|
|
43,295 |
|
Stock-based
compensation-interest |
|
|
— |
|
|
|
1,287,834 |
|
Interest
expense on lines of credit |
|
|
777,515 |
|
|
|
670,452 |
|
Non-cash
imputed interest expenses |
|
|
52,271 |
|
|
|
60,059 |
|
Bonuses
settled by issuance of shares |
|
|
245,000 |
|
|
|
— |
|
Loss
on settlement of debt |
|
|
— |
|
|
|
33,614 |
|
Changes
in operating assets and liabilities |
|
|
|
|
|
|
|
|
Decrease
(increase) in prepaid expenses |
|
|
(10,036 |
) |
|
|
5,103 |
|
Increase
in accounts payable and accrued liabilities |
|
|
324,650 |
|
|
|
17,736 |
|
Increase
in interest payable |
|
|
277,421 |
|
|
|
264,100 |
|
|
|
|
|
|
|
|
|
|
Net
cash used in operating activities |
|
|
(707,135 |
) |
|
|
(857,418 |
) |
|
|
|
|
|
|
|
|
|
FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
|
Proceeds
from lines of credit |
|
|
438,165 |
|
|
|
401,758 |
|
Proceeds
from promissory notes |
|
|
294,358 |
|
|
|
— |
|
Repayment
of lines of credit interest |
|
|
(137,475 |
) |
|
|
(370,723 |
) |
Proceeds
from sales of shares of common stock |
|
|
25 |
|
|
|
1,136,832 |
|
|
|
|
|
|
|
|
|
|
Net
cash provided by financing activities |
|
|
595,073 |
|
|
|
1,167,867 |
|
|
|
|
|
|
|
|
|
|
Effect
of foreign exchange on cash |
|
|
5,136 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Change
in cash |
|
|
(106,926 |
) |
|
|
310,449 |
|
Cash,
beginning of period |
|
|
115,922 |
|
|
|
66,190 |
|
Cash,
end of period |
|
$ |
8,996 |
|
|
$ |
376,639 |
|
See
accompanying notes to the condensed consolidated financial statements.
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
1. Basis
of presentation, nature of operations and going concern
ALR
Technologies Inc. (the “Company”) was incorporated under the laws of the state of Nevada on March 24, 1987. On
May 16, 2020, the Company incorporated a wholly owned subsidiary, ALR Technologies Sg Pte. Ltd. (“ALR Singapore”),
under the Companies Act of Singapore. On June 9, 2021, the Company incorporated a wholly owned subsidiary, Canada Diabetes
Solution Centre, Inc., under the Business Corporations Act of Alberta.
On
May 17, 2022, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Redomicile Merger Agreement”)
with ALR Technologies SG Pte. Ltd., a Singapore company limited by shares, and its wholly-owned subsidiary, ALRT Delaware, Inc., a Delaware
corporation (“ALR Delaware”), relating to a proposed merger transaction for the sole purpose of changing the Company’s
jurisdiction of incorporation from Nevada to Singapore. The Redomicile Merger Agreement provides that, upon the terms and subject to
the conditions set forth therein, ALR Delaware will merge with and into the Company (the “Redomicile Merger”), and
the Company will be the surviving entity and a wholly-owned subsidiary of ALR Singapore. ALR Delaware will cease to exist. At the closing
of the Redomicile Merger, the stockholders of the Company will exchange their shares of common stock, and any options or warrants to
purchase shares of common stock which they might hold, on a one-for-one basis, for ordinary shares (“ALR Singapore Ordinary
Shares”) and options or warrants to subscribe for ALR Singapore Ordinary Shares, as applicable. This Agreement contains customary
closing conditions, including, among others, approval of the Redomicile Merger by the Company’s stockholders, the effectiveness
of the registration statement on Form F-4 filed by ALR Singapore related to the Redomicile Merger, and receipt of required regulatory
approvals.
The
Company has developed its “Diabetes Solution”, which is a comprehensive approach to diabetes care consisting of data
collection, predictive A1C, insulin dosage adjustment suggestions, performance tracking, remote monitoring and diabetes test supplies.
The Company is seeking commercial opportunities to deploy the Diabetes Solution and GluCurve Pet CGM.
These
unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles
in the United States of America (“U.S. GAAP”) in U.S. dollars and on a going concern basis, which presumes the realization
of assets and the discharge of liabilities and commitments in the normal course of operations for the foreseeable future. Several adverse
conditions cast substantial doubt on the validity of this assumption. The Company has incurred significant losses over the six-month
periods ended June 30, 2022 and 2021 of $2,892,615 and $3,337,453, respectively. As of June 30, 2022, the Company is unable
to self-finance its operations, has a working capital deficit of $26,258,667 (December 31, 2021 - $24,312,143), accumulated
deficit of $104,907,692 (December 31, 2021 - $102,015,077), limited resources, no source of operating cash flow and no assurance
that sufficient funding will be available to conduct continued product development activities. If the Company is able to finance its
required product development activities, there is no assurance the Company’s current projects will be commercially viable or profitable.
The Company has debts comprised of accounts payable and accrued liabilities, interest payable, lines of credit and promissory notes payable
totaling $26,354,994 currently due, due on demand or considered delinquent. There is no assurance that the Company will not face additional
legal action from creditors regarding delinquent accounts payable, promissory notes payable and interest payable. Any one or a combination
of these above conditions could result in the failure of the business and cause the Company to cease operations.
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
1. Basis
of presentation, nature of operations and going concern (continued)
The
Company’s ability to continue as a going concern is dependent upon the continued financial support of its creditors and its ability
to obtain financing to fund working capital and overhead requirements, fund the development of the Company’s product line, and
ultimately, the Company’s ability to achieve profitable operations and repay overdue obligations. Management has obtained short-term
financing from related parties through line of credit facilities with available borrowing in principal up to $14,300,000. As of June 30,
2022, the total principal balance outstanding was $13,126,570. The resolution of whether the Company is able to continue as a going concern
is dependent upon the realization of management’s plans. There can be no assurance that the Company will be able to raise any additional
debt or equity capital from the sources described above or that the lenders in the line of credit arrangements will maintain the availability
of borrowing from the line. If management is unsuccessful in obtaining short-term financing or achieving long-term profitable operations,
the Company will be required to cease operations.
In
March 2020, the World Health Organization declared coronavirus, COVID-19, a global pandemic. This contagious disease outbreak, which
has continued to spread, and any related adverse public health developments, has adversely affected workforces, economies and financial
markets globally, potentially leading to an economic downturn. Management does not expect that COVID-19 will have a significant impact
on the Company; however, it could have a potential impact on the Company’s ability to raise money, market its products to attract
customers or procure equipment and parts for its glucose monitoring system.
All
of the Company’s debt is either due on demand or is in default, while continuing to accrue interest at its stated rate. The Company
will seek to obtain creditors’ consents to delay repayment of the outstanding promissory notes payable and related interest thereto,
until it is able to replace this financing with funds generated by operations, recapitalization with replacement debt or from equity
financings through private placements. While some of the Company’s creditors have agreed to extend repayment deadlines in the past,
there is no assurance that they will continue to do so in the future. In the past, creditors have successfully commenced legal action
against the Company to recover debts outstanding. In those instances, the Company was able to obtain financing from related parties to
cover the verdict or settlement; however, there is no assurance that the Company would be able to obtain the same financing in the future.
If the Company is unsuccessful in obtaining financing to cover any potential verdicts or settlements, the Company will be required to
cease operations.
The
Company’s activities will necessitate significant uses of working capital beyond 2022. Additionally, the Company’s capital
requirements will depend on many factors, including the success of the Company’s continued product development and distribution
efforts. The Company plans to continue financing its operations with the lines of credit it has available and other sources of financing.
2. Significant
accounting policies
These
unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, ALR Singapore,
which was incorporated on May 16, 2020 in Singapore, and Canada Diabetes Solution Centre, Inc., which was incorporated on June 9,
2021 in Alberta, Canada. The Canadian subsidiary is currently inactive. All significant intercompany balances and transactions have been
eliminated on consolidation.
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
2. Significant
accounting policies (continued)
The
unaudited condensed consolidated financial statements as of June 30, 2022 and for the period then ended have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in
annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules
and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.
In
the opinion of management, all adjustments necessary to present fairly the financial position as of June 30, 2022 and December 31,
2021 and the results of operations and cash flows as of June 30, 2022 and 2021, and for the periods then ended, have been made.
Those adjustments consist of normal and recurring adjustments.
These
unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes
thereto included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
The
results of operations for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the
full year.
3. Accounts
payable and accrued liabilities
A
summary of the accounts payable and accrued liabilities is as follows:
|
|
June
30,
2022 |
|
December
31,
2021 |
Accounts
payable |
|
$ |
1,074,813 |
|
|
$ |
806,059 |
|
Accrued
liabilities |
|
|
255,039 |
|
|
|
322,087 |
|
Deferred
revenue |
|
|
344 |
|
|
|
2,400 |
|
|
|
$ |
1,330,196 |
|
|
$ |
1,130,546 |
|
4.
Interest, advances and promissory notes payable
a) Promissory
notes payable to related parties
A
summary of activities of promissory notes payable to related parties is as follows:
Promissory
Notes Payable to Related Parties |
|
Carrying
Value |
Balance,
December 31, 2020 |
|
$ |
3,031,966 |
|
Transferred
from promissory notes payable pursuant to private transaction |
|
|
10,000 |
|
Balance,
December 31, 2021 |
|
|
3,041,966 |
|
Promissory
notes received |
|
|
50,000 |
|
Balance,
June 30, 2022 |
|
$ |
3,091,966 |
|
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
4.
Interest, advances and promissory notes payable (continued)
a) Promissory
notes payable to related parties (continued)
A
summary of the promissory notes payable to related parties is as follows:
Promissory
Notes Payable to Related Parties |
|
June
30,
2022 |
|
December 31,
2021 |
Promissory
notes payable to relatives of directors collateralized by a general security agreement over all the assets of the Company, past maturity: |
|
|
|
|
|
|
|
|
i.
Interest at 1% per month |
|
$ |
720,619 |
|
|
$ |
720,619 |
|
ii.
Interest at 1.25% per month |
|
|
51,347 |
|
|
|
51,347 |
|
iii.
Interest at the U.S. bank prime rate plus 1% |
|
|
100,000 |
|
|
|
100,000 |
|
iv.
Interest at 0.5% per month |
|
|
695,000 |
|
|
|
695,000 |
|
|
|
|
|
|
|
|
|
|
Unsecured promissory notes payable to relatives of
the Chairman with fixed amounts of interest due August 31, 2022 |
|
|
50,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Promissory
notes payable, unsecured, to relatives of a director, bearing interest at 1% per month, past maturity |
|
|
1,475,000 |
|
|
|
1,475,000 |
|
Total
Promissory Notes Payable to Related Parties |
|
$ |
3,091,966 |
|
|
$ |
3,041,966 |
|
|
|
|
|
|
|
|
|
|
The
Company received advances from relatives of the Chairman aggregating $50,000, with a fixed interest amount of $4,000, which will mature
and be repayable on August 31, 2022.
All
amounts past maturity continue to accrue interest at their stated rates and are considered due on demand.
b) Promissory
notes payable to unrelated parties
A
summary of activities of promissory notes payable to unrelated parties is as follows:
Promissory
Notes Payable to Unrelated Parties |
|
Carrying
Value |
Balance, December 31,
2020 |
|
$ |
2,254,353 |
|
Reclassified
to interest payable |
|
|
(10,985 |
) |
Extinguished
through issuance of shares of common stock (note 6) |
|
|
(20,000 |
) |
Transferred
to promissory notes payable pursuant to private transaction |
|
|
(10,000 |
) |
Balance,
December 31, 2021 |
|
|
2,213,368 |
|
Promissory
notes received |
|
|
244,358 |
|
Balance,
June 30, 2022 |
|
$ |
2,457,726 |
|
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
4. Interest,
advances and promissory notes payable (continued)
b) Promissory
notes payable to unrelated parties (continued)
A
summary of the promissory notes payable to unrelated parties is as follows:
Promissory
Notes Payable to Unrelated Parties |
June
30,
2022 |
December 31,
2021 |
Unsecured
promissory notes payable to unrelated lenders, past maturity: |
|
|
|
|
i.
Interest at 1% per month |
$ |
1,317,456 |
$ |
1,317,456 |
ii.
Interest at 0.667% per month |
|
425,000 |
|
425,000 |
iii.
Interest at 0.625% per month |
|
150,000 |
|
150,000 |
iv.
Non-interest-bearing |
|
270,912 |
|
270,912 |
|
|
|
|
|
Unsecured promissory notes
payable to unrelated lenders with fixed amounts of interest due August 31, 2022 |
|
244,358 |
|
- |
|
|
|
|
|
Promissory
notes payable, secured by a guarantee from the Chief Executive Officer, bearing interest at 1% per month, past maturity |
|
50,000 |
|
50,000 |
Total
Promissory Notes Payable to Unrelated Parties |
$ |
2,457,726 |
$ |
2,213,368 |
|
|
|
|
|
|
|
|
The
Company received advances from two shareholders aggregating SGD$340,000 ($244,358), with a fixed interest amount of $10,000, which will
mature and be repayable on August 31, 2022. The principal amount of SGD$150,000 was repaid to one shareholder in July 2022.
All
amounts past maturity continue to accrue interest at their stated rates and are considered due on demand.
c) Interest
payable
A
summary of the interest payable activity is as follows:
Interest
Payable |
|
Carrying
Value |
Balance, December 31,
2020 |
|
$ |
3,575,326 |
|
Reclassified
from promissory notes payable |
|
|
10,985 |
|
Interest
incurred on promissory notes payable |
|
|
527,336 |
|
Interest
payable retired through issuance of shares |
|
|
(3,000 |
) |
Balance, December 31,
2021 |
|
|
4,110,647 |
|
Interest
incurred on promissory notes payable |
|
|
277,421 |
|
Balance, June 30,
2022 |
|
$ |
4,388,068 |
|
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
4. Interest,
advances and promissory notes payable (continued)
c) Interest
payable (continued)
Interest
payable is due to related and non-related parties as follows:
Interest
Payable |
|
June
30,
2022 |
|
December 31,
2021 |
Related
parties |
|
$ |
1,362,918 |
|
|
$ |
1,200,170 |
|
Unrelated
parties |
|
|
3,025,150 |
|
|
|
2,910,477 |
|
|
|
$ |
4,388,068 |
|
|
$ |
4,110,647 |
|
The
payment terms, security and any interest payable are based on the underlying promissory notes payable that the Company has outstanding.
d) Interest
expense
During
the period ended June 30, 2022, the Company incurred interest expense of $1,109,764 (2021 - $2,283,770) as follows:
|
· |
$Nil (2021 - $1,287,834)
incurred related to the modification of options held by the Chairman and his spouse that were granted in connection with financing
provided to the Company; |
|
· |
$777,515 (2021 - $670,452)
incurred on lines of credit payable as shown in note 5; |
|
· |
$277,421 (2021 - $264,100)
incurred on promissory notes (notes 4(a) and 4(b)); |
|
· |
$52,271 (2021 - $60,059)
incurred from the calculation of imputed interest on accounts payable outstanding for longer than one year, advances payable and
promissory notes payable, which had no stated interest rate; and |
|
· |
$2,557 (2021 - $1,325)
interest on other items. |
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
5.
Lines of credit
A
summary of lines of credit activity is as follows:
Lines of
Credit |
|
Total |
Balance, December 31,
2020 |
|
$ |
11,914,092 |
|
Advances
received on lines of credit |
|
|
1,149,279 |
|
Interest
incurred on lines of credit |
|
|
1,402,187 |
|
Repayment
of interest on lines of credit |
|
|
(456,725 |
) |
Balance, December 31,
2021 |
|
|
14,008,833 |
|
Advances
received on lines of credit |
|
|
438,165 |
|
Interest
incurred on lines of credit |
|
|
777,515 |
|
Repayment
of interest on lines of credit |
|
|
(137,475 |
) |
Balance, June 30,
2022 |
|
$ |
15,087,038 |
|
On
December 10, 2021, the Company and the spouse of the Chairman entered into an amendment agreement to increase the borrowing limit on
the line of credit provided by the spouse of the Chairman to the Company from $2,000,000 to $4,000,000. The terms of amounts to be advanced
under the amendment are consistent with the line of credit. In connection with the line of credit, the Company granted the spouse of
the Chairman the option to acquire 40,000,000 shares of common stock of the Company at a price of $0.05 per share until December 31,
2026 (note 7).
As
of June 30, 2022, the Company had two lines of credit as follows:
Creditor |
Interest
Rate |
Borrowing
Limit |
Repayment
Terms |
Principal
Borrowed |
Accrued
Interest |
Total
Outstanding |
Security |
Purpose |
Chairman
and CEO |
1%
per Month |
$ 10,300,000 |
Due
on Demand |
$ 10,300,000 |
$ 1,763,048 |
$ 12,063,048 |
General
Security over Assets |
General
Corporate Requirements |
Wife
of Chairman |
1%
per Month |
4,000,000 |
Due
on Demand |
2,826,570 |
197,420 |
3,023,990 |
General
Security over Assets |
General
Corporate Requirements |
Total |
|
$
14,300,000 |
|
$
13,126,570 |
$
1,960,468 |
$
15,087,038 |
|
|
As
of December 31, 2021, the Company had two lines of credit as follows:
Creditor |
Interest
Rate |
Borrowing
Limit |
Repayment
Terms |
Principal
Borrowed |
Accrued
Interest |
Total
Outstanding |
Security |
Purpose |
Chairman
and CEO |
1%
per Month |
$ 10,300,000 |
Due
on Demand |
$ 10,220,700 |
$ 1,208,582 |
$ 11,429,282 |
General
Security over Assets |
General
Corporate Requirements |
Wife
of Chairman |
1%
per Month |
4,000,000 |
Due
on Demand |
2,467,705 |
111,846 |
2,579,551 |
General
Security over Assets |
General
Corporate Requirements |
Total |
|
$
14,300,000 |
|
$
12,688,405 |
$
1,320,428 |
$
14,008,833 |
|
|
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
6. Capital
stock
|
a) |
Authorized capital stock |
10,000,000,000
shares of common stock with a par value of $0.001 per share.
500,000,000
shares of preferred stock with a par value of $0.001 per share.
b) Issued
capital stock
During
the period ended June 30, 2022:
|
i) |
On January 18, 2022, the
Company issued a prospectus whereby it distributed 101,025,592 subscription rights to its shareholders to purchase shares of common
stock of the Company at a price of $0.05 per share. The rights were set to expire on February 18, 2022, subsequently extended to
March 15, 2022. On such case-by-case basis, the Company allowed for the exercise of any such shares until April 1, 2022.
Management may, at its discretion, allocate unexercised subscription rights to non-shareholders within 150 days (August 12,
2022) following the expiration date of March 15, 2022. On March 21, 2022, the Company recognized share subscriptions receivable
of $25 pursuant to its registration statement and issued a total of 500 shares of common stock for gross proceeds of $25. The subscription
rights were cancelled on July 7, 2022 (note 11(a)). |
|
ii) |
The Company issued four
parties an aggregate 9,250,000 shares of common stock at a fair value of $0.04 per share for a total of $370,000 in exchange for
the retirement of $125,000 of accounts payable and $245,000 for bonuses issued. |
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
6. Capital
stock (continued)
b) Issued
capital stock (continued)
During
the year ended December 31, 2021:
|
iii) |
On January 4, 2021, 1,000
shares of common stock were cancelled by a shareholder; no consideration was exchanged. |
|
iv) |
On April 12, 2021, the
Company elected to extend the initial 90-day period (April 22, 2021) by an additional 100-day period related to the closing
of the rights offering. The Company had until July 31, 2021 to sell the remaining 113,025,592 shares of common stock. The Company
further extended the offering period to October 29, 2021. The Company filed a post-effective amendment to further extend the rights
offering from October 29, 2021 to March 15, 2022. On such case-by-case basis, the Company allowed for the exercise of any such shares
until April 1, 2022. Management may, at its discretion, allocate unexercised subscription rights to non-shareholders within
150 days (August 12, 2022) following the expiration date of March 15, 2022. The subscription rights were cancelled on July 7,
2022 (note 11(a)). |
|
v) |
The Company collected subscriptions
of $1,124,832 pursuant to its registration statement and issued a total of 26,496,635 shares of common stock for gross proceeds of
$1,324,832; $200,000 of the proceeds had been collected during the year ended December 31, 2020 and recognized as obligation
to issue shares. |
|
vi) |
The Company received proceeds
of $12,000 pursuant to the exercise of options to acquire 800,000 shares of common stock at a price of $0.015 per share. |
|
vii) |
The Company entered into
two shares for debt agreements with two creditors to issue an aggregate 4,400,000 shares of common stock at a fair value of $0.057
per share for a purchase price of $250,800 in exchange for the retirement of $217,186 of liabilities comprised of: |
|
· |
Accounts payable - $ 194,186 |
|
· |
Promissory notes –
Principal - $ 20,000 |
|
· |
Line of credit –
Accrued interest - $ 3,000 |
The
Company recognized loss on debt settlement of $33,614. The Company also issued commitment letters to two creditors offering them an aggregate
20,000,000 shares of common stock in exchange for the extinguishment of $1,511,377 in promissory notes and interest payable prior to
December 31, 2021 (note 8). These offer letters expired on December 31, 2021 without the parties executing any settlements.
On March 18, 2022, the Company extended the offer letters from December 31, 2021 to December 31, 2022 for the settlement
of $1,541,000 in promissory notes and interest payable. As of the date of these condensed consolidated financial statements, the offer
letters have not been executed.
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
7.
Additional paid-in capital
Stock
options
A
summary of stock option activity is as follows:
|
Six
Months Ended
June 30,
2022 |
Year
Ended
December 31,
2021 |
|
Number
of Options |
Weighted
Average Exercise Price |
Number
of Options |
Weighted
Average Exercise Price |
Outstanding,
beginning of period |
5,497,001,500 |
$ |
0.006 |
5,362,701,500 |
$ |
0.004 |
Granted |
- |
$ |
- |
165,000,000 |
$ |
0.050 |
Exercised
|
- |
$ |
- |
(800,000) |
$ |
(0.015) |
Cancelled |
(90,000,000) |
$ |
(0.041) |
(29,900,000) |
$ |
(0.034) |
Outstanding,
end of period |
5,407,001,500 |
$ |
0.005 |
5,497,001,500 |
$ |
0.006 |
|
|
|
|
|
|
|
Exercisable,
end of period |
5,223,701,500 |
$ |
0.004 |
5,221,701,500 |
$ |
0.004 |
During
the period ended June 30, 2022:
On
March 18, 2022, the Company modified 70,000,000 options previously granted to a number of advisors and independent contractors by extending
the vesting period under vesting terms, which have not been met, from September 30, 2021 and December 31, 2021 to December 31,
2022, and from June 30, 2022 to June 30, 2023.
On
March 18, 2022, the Company amended 2,500,000 options previously granted to an individual on October 4, 2021 by vesting 1,000,000
options with performance conditions and cancelling the remaining 1,500,000 options. During the period ended June 30, 2022, $59,639
related to the 1,000,000 options that vested immediately was recorded.
Effective
March 18, 2022, the Company cancelled 20,000,000 stock options exercisable at $0.015, 10,000,000 stock options exercisable at $0.035
and 28,500,000 exercisable at $0.05 related to the termination of certain contractors.
On
April 27, 2022, the Company provided termination notice to a contractor. As a result, the contractor’s 30,000,000 stock options
exercisable at $0.05 were cancelled, unvested, effective June 30, 2022.
During
the period ended June 30, 2022, the Company recorded a total of $518,659 in compensation expense related to the vesting of stock
options granted in 2021, including the $59,639 from the modification of vesting terms of 1,000,000 options.
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
7.
Additional paid-in capital (continued)
Stock
options (continued)
During
the year ended December 31, 2021:
On
January 28, 2021, the Company granted the option to acquire an aggregate 32,000,000 shares of common stock at a price of $0.05 per share
to six individuals. All of the options will vest according to performance or time-based conditions. Options to acquire 22,000,000 shares
of common stock will expire December 31, 2025, and options to acquire 10,000,000 shares of common stock will expire May 17,
2024. As at June 30, 2022, 2,000,000 (December 31, 2021 - 1,000,000) options have vested to date. The fair value of the
options granted totals $1,706,244, of which $573,292 relates to stock options that have time-based vesting conditions and $1,132,952
relates to stock options that have performance vesting conditions. During the period ended June 30, 2022, $98,726 (December 31,
2021 - $248,189) related to stock options with time-based vesting conditions and $56,648 (December 31, 2021 - $nil) related to stock
options with performance-based vesting conditions was recognized. The remaining fair value of $1,302,681 has not been recorded.
On
February 22, 2021, the Company granted the option to acquire an aggregate 5,000,000 shares of common stock at a price of $0.05 per share.
These options were granted to three individuals and have an expiry date of May 17, 2024. None of these options have vested to date. The
fair value of the options granted totaled $225,141. During the period ended June 30, 2022, $34,638 (December 31, 2021 - $57,730)
related to stock options with time-based vesting conditions was recognized. The remaining fair value of $132,773 has not been recorded.
On
April 14, 2021, the Company’s Board of Directors approved the grant of the option to acquire an aggregate 28,500,000 shares of
common stock at a price of $0.05 per share until December 31, 2025 to five individuals. All of the options will vest according to
performance or time-based conditions; 200,000 options have vested to date. The fair value of the options granted totaled $1,565,812,
of which $351,621 related to stock options that have time-based vesting conditions and $1,214,191 related to stock options that have
performance vesting conditions. During the period ended June 30, 2022, $54,558 (December 31, 2021 - $88,540) related to the
stock options with time-based vesting conditions was recognized. The remaining fair value of $1,422,714 has not been recorded.
On
May 12, 2021, the Company’s Board of Directors amended the option to acquire 2,000,000 shares, previously granted on January 28,
2021 to a consultant, to increase the option by 1,000,000 to provide the optionee the option to acquire an aggregate 3,000,000 shares
of common stock at a price of $0.05 per share until December 31, 2025. All other terms of the January 28, 2021 grant remain the
same and the options are subject to performance vesting conditions. The fair value of the additional 1,000,000 amended options granted
totaled $54,940 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.
On
May 31, 2021, the Company granted one consultant the option to acquire 5,000,000 shares of common stock of the Company at a price of
$0.05 per share until December 31, 2025 subject to performance vesting conditions. The fair value of the options granted totaled
$254,708 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
7.
Additional paid-in capital (continued)
Stock
options (continued)
During
the year ended December 31, 2021: (continued)
On
June 27, 2021, the Company cancelled 7,400,000 stock options with an average exercise price of $0.033.
On
June 27, 2021, the Company’s Board of Directors approved the grant of the option to acquire an aggregate 21,000,000 shares of common
stock at a price of $0.05 per share until June 30, 2026 to four individuals. All of the options will vest according to performance
or time-based conditions. The fair value of the options granted totaled $1,374,208, of which $26,175 related to stock options with time-based
vesting conditions and $1,348,033 related to stock options with performance vesting conditions. During the period ended June 30,
2022, $9,812 (December 31, 2021 - $9,816) related to the stock options with time-based vesting conditions was recognized. The remaining
fair value of $1,354,580 has not been recorded.
On
June 30, 2021, the Company amended the option to acquire 4,365,001,300 shares of common stock granted on July 1, 2016 by extending
the expiry date from July 1, 2021 to April 12, 2024. The options were granted in connection with lines of credit provided by
the Chairman and his spouse, which are currently outstanding (note 5). All of the options had vested in previous years. The fair
value of the amendments totaled $1,287,834 and was recorded during the year ended December 31, 2021 in interest expense.
Effective
July 22, 2021, the Company cancelled 22,500,000 stock options exercisable at $0.035 related to the termination of certain contractors
and advisors.
On
August 27, 2021, the Company granted a member of the Board of Directors the option to acquire 5,000,000 shares of common stock at a price
of $0.05 per share until June 30, 2026. The fair value of the options granted totaling $304,692 was fully recorded at grant.
On
October 4, 2021, the Company granted two individuals the option to acquire an aggregate 17,500,000 options at an exercise price of $0.05
per share until September 30, 2026; 15,000,000 of the options will vest according to time-based conditions and 2,500,000 will vest
according to performance conditions. On March 18, 2022,
the Company cancelled 1,500,000 options and vested 1,000,000 options with performance vesting conditions. As
at June 30, 2022, 1,000,000 (December 31, 2021 - nil) options have vested to date. The fair value of the options granted
totaled $1,043,690, of which $894,592 related to stock options that have time-based vesting conditions and $149,098 related to stock
options that have performance vesting conditions. During the period ended June 30, 2022, $204,638 (December 31, 2021 - $101,758)
related to stock options with time-based vesting conditions and $59,639 (December 31, 2021 - $nil) related to stock options with
performance-based vesting conditions was recognized. The remaining fair value of $677,655 has not been recorded.
On
December 10, 2021, the Company granted one creditor the option to acquire 40,000,000 shares of common stock of the Company at a price
of $0.05 per share until December 31, 2026 in connection with receiving line of credit financing (note 5). The fair value of
the options granted totaled $2,137,286 and was fully recorded upon the Company entering into the financing agreement with the creditor.
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
7.
Additional paid-in capital (continued)
Stock
options (continued)
During
the year ended December 31, 2021: (continued)
On
December 10, 2021, the Company granted one consultant the option to acquire 10,000,000 shares of common stock of the Company at a price
of $0.05 per share until December 31, 2026 subject to performance vesting conditions. The fair value of the options granted totaled
$534,321 was not recorded, as it cannot be determined that it is more likely than not that the performance condition will be met.
During
the year ended December 31, 2021, the Company recorded a further $167,373 in compensation expense related to the vesting of stock
options granted in previous years.
Outstanding:
The
options outstanding at June 30, 2022 and December 31, 2021 were as follows:
|
June 30, 2022 |
December 31, 2021 |
Expiry Date |
Options |
Exercise Price |
Intrinsic Value |
Options |
Exercise Price |
Intrinsic Value |
|
|
|
|
|
|
|
|
|
|
|
November 27, 2022 |
5,600,000 |
$ |
0.015 |
$ |
0.044 |
5,600,000 |
$ |
0.015 |
$ |
0.045 |
January 31, 2023 |
20,500,000 |
$ |
0.015 |
$ |
0.044 |
40,500,000 |
$ |
0.015 |
$ |
0.045 |
June 13, 2023 |
5,000,000 |
$ |
0.015 |
$ |
0.044 |
5,000,000 |
$ |
0.015 |
$ |
0.045 |
March 14, 2024 |
6,650,000 |
$ |
0.035 |
$ |
0.024 |
6,650,000 |
$ |
0.035 |
$ |
0.025 |
April 12, 2024 |
4,925,001,500 |
$ |
0.002 |
$ |
0.057 |
4,925,001,500 |
$ |
0.002 |
$ |
0.058 |
April 12, 2024 |
3,350,000 |
$ |
0.015 |
$ |
0.044 |
3,350,000 |
$ |
0.015 |
$ |
0.045 |
April 12, 2024 |
200,000 |
$ |
0.030 |
$ |
0.029 |
200,000 |
$ |
0.030 |
$ |
0.030 |
May 6, 2024 |
13,000,000 |
$ |
0.035 |
$ |
0.024 |
13,000,000 |
$ |
0.035 |
$ |
0.025 |
May 17, 2024 |
57,000,000 |
$ |
0.050 |
$ |
0.009 |
77,000,000 |
$ |
0.050 |
$ |
0.010 |
May 17, 2024 |
19,400,000 |
$ |
0.035 |
$ |
0.024 |
19,400,000 |
$ |
0.035 |
$ |
0.025 |
June 17, 2024 |
- |
$ |
- |
$ |
- |
5,000,000 |
$ |
0.050 |
$ |
0.010 |
August 16, 2024 |
- |
$ |
- |
$ |
- |
2,500,000 |
$ |
0.050 |
$ |
0.010 |
September 6, 2024 |
- |
$ |
- |
$ |
- |
1,000,000 |
$ |
0.050 |
$ |
0.010 |
October 3, 2024 |
3,500,000 |
$ |
0.035 |
$ |
0.024 |
3,500,000 |
$ |
0.035 |
$ |
0.025 |
October 24, 2024 |
2,000,000 |
$ |
0.035 |
$ |
0.024 |
2,000,000 |
$ |
0.035 |
$ |
0.025 |
December 11, 2024 |
120,000,000 |
$ |
0.015 |
$ |
0.044 |
120,000,000 |
$ |
0.015 |
$ |
0.045 |
April 1, 2025 |
10,000,000 |
$ |
0.035 |
$ |
0.024 |
10,000,000 |
$ |
0.035 |
$ |
0.025 |
May 31, 2025 |
10,000,000 |
$ |
0.035 |
$ |
0.024 |
20,000,000 |
$ |
0.035 |
$ |
0.025 |
May 31, 2025 |
57,300,000 |
$ |
0.050 |
$ |
0.009 |
87,300,000 |
$ |
0.050 |
$ |
0.010 |
December 31, 2025 |
56,500,000 |
$ |
0.050 |
$ |
0.009 |
56,500,000 |
$ |
0.050 |
$ |
0.010 |
June 30, 2026 |
26,000,000 |
$ |
0.050 |
$ |
0.009 |
26,000,000 |
$ |
0.050 |
$ |
0.010 |
September 30, 2026 |
16,000,000 |
$ |
0.050 |
$ |
0.009 |
17,500,000 |
$ |
0.050 |
$ |
0.010 |
December 31, 2026 |
50,000,000 |
$ |
0.050 |
$ |
0.009 |
50,000,000 |
$ |
0.050 |
$ |
0.010 |
Total |
5,407,001,500 |
$ |
0.005 |
$ |
0.053 |
5,497,001,500 |
$ |
0.006 |
$ |
0.054 |
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Remaining Contractual Life |
|
|
1.87 |
|
|
|
|
2.37 |
|
|
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
7.
Additional paid-in capital (continued)
Stock
options (continued)
The
fair value of the stock options granted and vested was allocated as follows:
|
|
Three
Months Ended
June 30,
2022 |
|
Three
Months Ended
June 30,
2021 |
|
Six
Months Ended
June 30,
2022 |
|
Six
Months Ended
June 30,
2021 |
Interest
expense |
|
$ |
— |
|
|
$ |
1,287,834 |
|
|
$ |
— |
|
|
$ |
1,287,834 |
|
Product
development expense |
|
|
56,418 |
|
|
|
61,697 |
|
|
|
118,586 |
|
|
|
97,842 |
|
Professional
expense |
|
|
8,957 |
|
|
|
28,070 |
|
|
|
17,916 |
|
|
|
43,295 |
|
Selling,
general and administrative expenses |
|
|
133,495 |
|
|
|
— |
|
|
|
382,157 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
198,870 |
|
|
$ |
1,377,601 |
|
|
$ |
518,659 |
|
|
$ |
1,428,971 |
|
The
Company uses the fair value method for determining stock-based compensation for all options granted during the fiscal periods. The fair
value was determined using the Black-Scholes option pricing model based on the following weighted average assumptions:
|
|
June 30,
2022 |
|
December 31,
2021 |
Risk-free
interest rate |
|
|
N/A |
|
|
|
0.87 |
% |
Expected
life |
|
|
N/A |
|
|
|
4.8 years |
|
Expected
dividends |
|
|
N/A |
|
|
|
0 |
% |
Expected
volatility |
|
|
N/A |
|
|
|
278 |
% |
Forfeiture
rate |
|
|
N/A |
|
|
|
0 |
% |
There
were no options granted during the six months ended June 30, 2022. The weighted average fair value for the options granted during
the year ended December 31, 2021 was $0.06.
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
8. Related
party transactions and balances
|
|
Three
Months Ended
June 30,
2022 |
|
Three
Months Ended
June 30,
2021 |
|
Six
Months Ended
June 30,
2022 |
|
Six
Months Ended
June 30,
2021 |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
Related party transactions included within interest
expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expenses on promissory notes issued to relatives of the Chairman and Chief Executive Officer of the Company |
|
|
83,457 |
|
|
|
78,981 |
|
|
|
162,749 |
|
|
|
157,963 |
|
Interest
expense on lines of credit payable to the Chairman and Chief Executive Officer of the Company and his spouse |
|
|
392,593 |
|
|
|
355,715 |
|
|
|
777,515 |
|
|
|
670,452 |
|
Interest
expense related to the modification of stock options held by the Chairman and Chief Executive Officer of the Company and his spouse
related to financing provided |
|
|
— |
|
|
|
1,287,834 |
|
|
|
— |
|
|
|
1,287,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related party transactions including within selling,
general and administrative expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
fees to the Chairman and Chief Executive Officer of the Company accrued on the line of credit available to the Company |
|
|
62,400 |
|
|
|
62,400 |
|
|
|
124,800 |
|
|
|
124,800 |
|
Consulting
fees to a director of the Company settled with issuance of common stock |
|
|
40,000 |
|
|
|
— |
|
|
|
40,000 |
|
|
|
— |
|
Salary
for services as VP Corporate and director of the Singapore subsidiary to the spouse of the Chairman and Chief Executive Officer of
the Company |
|
|
10,890 |
|
|
|
11,254 |
|
|
|
21,981 |
|
|
|
11,254 |
|
Loss
on settlement of debt to a relative of the Chairman and Chief Executive Officer of the Company |
|
|
— |
|
|
|
16,800 |
|
|
|
— |
|
|
|
16,800 |
|
Rent
paid to a company controlled by the spouse of the Chairman and immediate family members |
|
|
8,006 |
|
|
|
— |
|
|
|
20,206 |
|
|
|
— |
|
Interest
on promissory notes payable to related parties, management compensation and compensation paid to a relative of a director have been recorded
at the exchange amount, which is the amount agreed to by the parties.
The
Company also issued commitment letters to two creditors who are relatives of the Chairman and Chief Executive Officer of the Company
offering them an aggregate 20,000,000 shares of common stock in exchange for
the extinguishment of $1,511,377 in promissory notes and interest payable prior to December 31, 2021 (note 6(b)(vii)). These
offer letters expired on December 31, 2021 without the parties executing any settlements. On March 18, 2022, the Company extended
the offer letters from December 31, 2021 to December 31, 2022 for the settlement of $1,541,000 in promissory notes and interest
payable. As of the date of these condensed consolidated financial statements, the offer letters have not been executed.
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
8.
Related party transactions and balances (continued)
On
June 3, 2022, the Company issued an aggregate of 1,000,000 shares of common stock at a fair value of $0.04 per share for the settlement
of $40,000 for a bonus issued and recognized in consulting fees (note 6(b)(ii)).
On
July 7, 2022, the Company granted the Chairman and Chief Executive Officer the option to acquire 115,500,000 shares of common stock of
the Company at a price of $0.05 per share until December 31, 2026 (note 11(a)).
9. Commitments
and contingencies
The
Company has had three judgments against it relating to overdue promissory notes and accrued interest, and a fourth creditor has demanded
repayment of an overdue promissory note and accrued interest. To date, the Company has not repaid any of these promissory notes and related
accrued interest and could be subject to further action. The legal liability, totaling $1,271,981, of these promissory notes and related
accrued interest have been fully recognized and recorded by the Company. The Company has accrued interest of $291,457 related to one
of these promissory notes.
On
December 22, 2020, a default judgment was entered against the Company in regard to one of the above noted judgments totaling $551,576,
consisting of the principal amount of $300,000 and accrued interest of $251,576, as of the date of the Civil Summons.
The
Company has a consulting arrangement with Mr. Sidney Chan, Chief Executive Officer and Chairman of the Board of Directors of the Company.
Under the terms of the contract, Mr. Chan will be paid $240,000 per annum for services as Chief Executive Officer. The contract can be
terminated at any time with thirty days’ notice and the payment of two years’ annual salary. Should the contract be terminated,
all debts owed to Mr. Chan and his spouse must be immediately repaid. The initial term of the contract is for one year and automatically
renews for continuous one-year terms. Also, under the terms of the contract are the following:
|
1) |
Incentive revenue bonus |
Mr.
Chan will be entitled to a 1% net sales commission from the sales of any of the Company’s products at any time during his life,
regardless if Mr. Chan is still under contract with the Company.
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
9. Commitments
and contingencies (continued)
b)
Commitments (continued)
|
i) |
Management contract (continued) |
If
more than 50% of the Company’s stock or assets are sold, Mr. Chan will be compensated for entering into non-compete agreements
based on the selling price of the Company or its assets as follows:
|
i. |
2% of sales price up to
$24,999,999 plus |
|
ii. |
3% of sales price between
$25,000,000 and $49,999,999 plus |
|
iii. |
4% of sales price between
$50,000,000 and $199,999,999 plus |
|
iv. |
5% of sales price in excess
of $200,000,000. |
On
August 4, 2022, ALR Singapore entered into an Employment Agreement with the Chairman and Chief Executive Officer (the “Employment
Agreement”) with an effective date of July 1, 2022 (note 11(c)).
|
ii) |
Manufacturing and Supply
Agreement |
On
June 28, 2022, ALR Singapore entered into a Manufacturing and Supply Agreement (the “Supply Agreement”) with
Infinovo Medical Co., Ltd. (“Infinovo”). Pursuant to the Supply Agreement, Infinovo will manufacture and supply certain
continuous glucose monitoring components necessary to the Company’s diabetes management platform for animal health, known as “GluCurve”.
The term of the Supply Agreement continues for three years from August 1, 2022, unless earlier terminated in accordance with the
terms of the Supply Agreement. The Supply Agreement, however, will not become effective unless (i) ALR Singapore enters into a binding
distribution agreement for the sale and distribution of GluCurve by July 31, 2022, and (ii) ALR Singapore and Infinovo enter into
a quality agreement by July 31, 2022. There can be no assurance that the two conditions to effectiveness of the Supply Agreement
will be satisfied. If the conditions are met and the agreement becomes effective, the Supply Agreement will automatically renew for additional
one year terms unless ALR Singapore or Infinovo provides written notice of its intent to terminate the Supply Agreement. The Supply Agreement
provides for customary reasons to terminate the Supply Agreement for cause with immediate effect.
The
closing conditions for the Supply Agreement between ALR Singapore and Infinovo were not met and the Supply Agreement has now terminated
(note 11(d)).
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
10. Operating
segments
The
Company has one operating segment, development of diabetes hardware and software. The Company’s geographical segments are summarized
as follows:
|
|
June
30,
2022 |
|
December 31,
2021 |
Current and Total Assets |
|
|
|
|
|
|
|
|
Other |
|
$ |
15,327 |
|
|
$ |
9,547 |
|
Singapore |
|
|
3,777 |
|
|
|
110,527 |
|
United States |
|
|
77,223 |
|
|
|
73,143 |
|
|
|
$ |
96,327 |
|
|
$ |
193,217 |
|
|
|
Six
Months
Ended
June 30, 2022 |
|
Six
Months
Ended
June 30, 2021 |
Revenue |
|
|
|
|
|
|
|
|
Other |
|
$ |
— |
|
|
$ |
— |
|
Singapore |
|
|
2,023 |
|
|
|
— |
|
United States |
|
|
— |
|
|
|
— |
|
|
|
$ |
2,023 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
Net
Loss |
|
|
|
|
|
|
|
|
Other |
|
$ |
(1,457 |
) |
|
$ |
— |
|
Singapore |
|
|
(141,861 |
) |
|
|
(77,666 |
) |
United States |
|
|
(2,749,297 |
) |
|
|
(3,259,787 |
) |
|
|
$ |
(2,892,615 |
) |
|
$ |
(3,337,453 |
) |
11. Subsequent
events
|
a) |
On July 7, 2022, the Company
granted the Chairman and Chief Executive Officer the option to acquire 115,500,000 shares of common stock of the Company at a price
of $0.05 per share until December 31, 2026. The Company canceled the subscription
rights to distribute 101,025,092 shares of common stock at a price of $0.05 pursuant to the prospectus (note 6(b)(i)). |
|
b) |
On July
12, 2022, ALR Singapore received advances from a relative of the Chairman aggregating SGD$500,000, with interest of $150 per day
outstanding payable upon maturity or early payment, which will mature and be repayable on August 31, 2022. The principal amount
of SGD$500,000 was repaid on July 18, 2022. |
|
c) |
On August 4, 2022, ALR
Singapore entered into an Employment Agreement with the Chairman and Chief Executive Officer with an effective date of July 1, 2022
(note 9(b)(i)). The terms of the Employment Agreement were materially the same as the Services Agreement between the Company and
the Chief Executive Officer, except as follows: |
ALR
TECHNOLOGIES INC.
Notes
to Condensed Consolidated Financial Statements
For
the Six Months Ended June 30, 2022
($
United States)
(Unaudited)
11. Subsequent
events (continued)
|
c) |
Employment Agreement (continued) |
|
· |
The
incentive compensation whereby Mr. Chan will earn a 1% commission from the sale of Company products has been amended to be in perpetuity
and assignable. Previously, the commission was based on the lifetime of Mr. Chan, and |
|
· |
Mr.
Chan has relinquished his right to certain compensation on the sale of the business or assets of the Company or its affiliates. |
In
connection with entering into the Employment Agreement with ALR Singapore:
|
1) |
Mr.
Chan has been issued a bonus of $150,000 as consideration for the advancements to the GluCurve business unit; |
|
2) |
the
services agreement between the Company and Mr. Chan has terminated, and |
|
3) |
Mr.
Chan will continue to act as Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Treasurer of the Company. |
This
Employment Agreement is executed and the Services Agreement is being terminated in connection with the Redomicile Agreement.
|
d) |
The closing conditions
for the Supply Agreement between ALR Singapore and Infinovo were not met and the Supply Agreement has now terminated. The parties
are now working on completing a new agreement whereby the closing condition for ALR Singapore to enter into a binding sales and distribution
agreement for the GluCurve would be August 31, 2022. Should the parties enter into a new manufacturing and supply agreement, it will
not become effective unless ALR Singapore enters into a binding distribution agreement for the sale and distribution of GluCurve
by August 31, 2022. There can be no assurance that the parties will enter in such new agreement or that this condition to effectiveness
of the new agreement will be satisfied (note 9(b)(ii)). |
Annex
Index
Annex
A: Merger Agreement
Annex
B: Nevada Revised Statutes, Sections 92A.300 to 92A.500, regarding Rights of Dissenting Owners
Annex
C: Form of Constitution of ALR Singapore
Annex
A
AGREEMENT
AND PLAN OF MERGER AND REORGANIZATION
This
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this “Agreement”) is entered into as of May 17, 2022 by and
among ALR Technologies SG Pte. Ltd., a Singapore private company limited by shares (“Parent”), ALRT Delaware, Inc.,
a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”), and ALR Technologies Inc., a Nevada
corporation (“Company”).
WHEREAS,
the Board of Directors of Company (“Company Board”) has (a) determined that it is in the best interests of Company
and its shareholders, and declared it advisable, to enter into this Agreement with Parent and Merger Sub, (b) approved, subject to the
majority approval of its shareholders, the execution, delivery and performance of this Agreement and the consummation of the transactions
contemplated hereby, including the Merger (as defined below), and (c) resolved, subject to the terms and conditions set forth in this
Agreement, to recommend adoption and approval of this Agreement and the Merger by the shareholders of Company;
WHEREAS,
the Board of Directors of Parent (the “Parent Board”) has determined that the Merger is consistent with and in furtherance
of the long-term business strategy of Parent and in the best interests of, Parent and its shareholder and has approved and adopted this
Agreement, the Merger and the other transactions contemplated by this Agreement;
WHEREAS,
the Board of Directors of Merger Sub, and Parent as the sole shareholder of Merger Sub, have approved and adopted the this Agreement
and the Merger and other transactions contemplated thereby;
WHEREAS,
for federal income tax purposes, the Merger is intended to qualify as a reorganization under the provisions of Section 368(a) of the
United States Internal Revenue Code of 1986, as amended (the “Code”), subject to the impact of Section 367 of the
Code on U.S. stockholders; and
WHEREAS,
the parties desire to make certain representations, warranties, covenants and agreements in connection with the Merger and the transactions
contemplated by this Agreement and also to prescribe certain conditions to the Merger;
NOW,
THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, the
parties agree as follows:
ARTICLE
I.
THE MERGER
1.1
The Merger. On the terms and subject to the conditions set forth in this Agreement, and in accordance with the Nevada Revised Statutes
(the “NRS”) and the Delaware General Corporation Law (the “DGCL”), at the Effective Time, (a) Merger
Sub will merge with and into Company (the “Merger”), and (b) the separate corporate existence of Merger Sub will cease
and Company will continue its corporate existence under the NRS as the surviving corporation (the “Surviving Corporation”)
in the Merger and a wholly-owned subsidiary of Parent.
1.2
Closing. Upon the terms and subject to the conditions set forth herein, the closing of the Merger (the “Closing”)
will take place at a date and time agreed upon by the parties hereto as soon as practicable following the satisfaction or waiver of all
of the closing conditions set forth in Article VI below. The Closing shall be held at the offices of Dentons Durham Jones Pinegar P.C.,
192 East 200 North, Third Floor, St. George, Utah 84770, or remotely by exchange of documents and signatures (or their electronic counterparts),
unless another place is agreed to in writing by the parties hereto. The actual date of the Closing is hereinafter referred to as the
“Closing Date”.
1.3
Effective Time. Subject to the provisions of this Agreement, at the Closing, Company, Parent and Merger Sub will cause Articles of
Merger (the “Nevada Articles of Merger”) to be executed, acknowledged and filed with the Nevada Secretary of State,
and a Certificate of Merger (the “Delaware Certificate of Merger”) to be executed, acknowledged and filed with the
Delaware Secretary of State in accordance with the relevant provisions of the NRS and the DGCL. The Merger will become effective at such
time as both the Nevada Articles of Merger and the Delaware Certificate of Merger have been duly filed, respectively, with the Nevada
Secretary of State and the Delaware Secretary of State, or at such later date or time as may be agreed by Company, Parent, and Merger
Sub in writing and specified in both the Nevada Articles of Merger in accordance with the NRS and the Delaware Certificate of Merger
in accordance with the DGCL (the effective time of the Merger being referred to herein as the “Effective Time”).
1.4
Effects of the Merger. The Merger shall have the effects set forth herein and in the applicable provisions of the NRS and the DGCL.
Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, all property, rights, privileges,
immunities, powers, franchises, licenses and authority of Company and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions and duties of each of Company and Merger Sub shall become the debts, liabilities, obligations,
restrictions and duties of the Surviving Corporation.
1.5
Articles of Incorporation; Bylaws. At the Effective Time, (a) the articles of incorporation of Company as in effect immediately prior
to the Effective Time shall be the articles of incorporation of the Surviving Corporation until thereafter amended in accordance with
the terms thereof or as provided by applicable law; and (b) the bylaws of Company as in effect immediately prior to the Effective Time
shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with the terms thereof, the articles of incorporation
of the Surviving Corporation or as provided by applicable law.
1.6
Company Directors and Officers. The directors and officers of the Company, in each case, immediately prior to the Effective
Time shall, from and after the Effective Time, be the directors and officers, respectively, of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their earlier death, resignation, or removal in accordance with
the certificate of incorporation and bylaws of the Surviving Corporation.
ARTICLE
II.
EFFECT OF THE MERGER ON CAPITAL STOCK
2.1
Effect of the Merger on Capital Stock. At the Effective Time, as a result of the Merger and without any action on the part of Parent,
Merger Sub or Company or the holder of any capital stock of Parent, Merger Sub or Company:
(a)
Cancellation of Certain Company Common Stock. Each share of Company Common Stock that is owned by Parent or Company, if any (as
treasury stock or otherwise) or any of their respective direct or indirect wholly-owned subsidiaries as of immediately prior to the Effective
Time (the “Cancelled Shares”) will automatically be cancelled and retired and will cease to exist, and no consideration
will be delivered in exchange therefore.
(b)
Conversion of Company Common Stock. Subject to Section 2.3 below, each Company Share issued and outstanding immediately prior
to the Effective Time will be converted into the right to receive: (i) one (the “Exchange Ratio”) ordinary share of
Parent (the “Merger Consideration”) and (ii) any cash in lieu of fractional Parent ordinary shares payable pursuant
to Section 2.1(e).
(c)
Cancellation of Company Shares. At the Effective Time, all shares of Company Common Stock will no longer be outstanding and all
shares of Company Common Stock will be cancelled and retired and will cease to exist, and each holder of: (i) a certificate formerly
representing any shares of Company Common Stock (each, a “Certificate”); or (ii) any book-entry shares which immediately
prior to the Effective Time represented shares of Company Common Stock (each, a “Book-Entry Share”) will cease to
have any rights with respect thereto, except the right to receive (A) the Merger Consideration in accordance with Section 2.2 hereof,
and (B) any cash in lieu of fractional Parent ordinary shares payable pursuant to Section 2.1(e).
(d)
Conversion of Merger Sub Capital Stock. Each share of common stock, par value $0.001 per share, of Merger Sub
issued and outstanding immediately prior to the Effective Time shall be converted into and become one newly issued, fully paid, and non-assessable
share of common stock, par value $0.001 per share, of the Surviving Corporation with the same rights, powers, and privileges as the shares
so converted and shall constitute the only outstanding shares of capital stock of the Surviving Corporation, such that the Surviving
Corporation will become a wholly-owned subsidiary of Parent. From and after the Effective Time, all certificates representing shares
of Merger Sub Common Stock shall be deemed for all purposes to represent the number of shares of common stock of the Surviving
Corporation into which they were converted in accordance with the immediately preceding sentence.
(e)
Fractional Shares. No certificates or scrip representing fractional shares of ordinary shares in the Parent shall be issued upon
the conversion of Company Common Stock pursuant to Section 2.1(b), and such fractional share interests shall not entitle the owner thereof
to vote or to any other rights of a holder of ordinary shares in the Parent. Notwithstanding any other provision of this Agreement,
each holder of shares of Company Common Stock converted pursuant to the Merger who would otherwise have been entitled to receive
a fraction of ordinary share in the Parent (after taking into account all shares of Company Common Stock exchanged by such holder) shall
in lieu thereof, upon surrender of such holder’s Certificates and Book-Entry Shares, receive in cash (rounded to the nearest whole
cent), without interest, an amount equal to such fractional amount multiplied by the last reported sale price of Company Common Stock
on the OTCQB on the last complete trading day prior to the date of the Effective Time.
2.2
Exchange Procedures.
(a)
Exchange Agent; Exchange Fund. Prior to the Effective Time, Parent shall appoint an exchange agent (the “Exchange Agent”)
to act as the agent for the purpose of paying the Merger Consideration for: the Certificates and the Book-Entry Shares. At or promptly
following the Effective Time, Parent shall deposit with the Exchange Agent: (i) certificates representing the Parent ordinary shares
to be issued as Merger Consideration (or make appropriate alternative arrangements if uncertificated Parent ordinary shares represented
by book-entry shares will be issued); and (ii) cash sufficient to make payments in lieu of fractional shares pursuant to Section 2.1(e).
Such cash and shares of Parent ordinary shares deposited with the Exchange Agent pursuant to this Section 2.2(a), are referred to collectively
in this Agreement as the “Exchange Fund.”
(b)
Procedures for Surrender; No Interest. Promptly after the Effective Time, Parent shall send, or shall cause the Exchange Agent
to send, to each record holder of shares of Company Common Stock at the Effective Time, whose Company Common Stock was converted pursuant
to Section 2.1(b) into the right to receive the Merger Consideration, a letter of transmittal and instructions (which shall specify that
the delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery of the Certificates or transfer of the
Book-Entry Shares to the Exchange Agent, and which letter of transmittal will be in customary form and have such other provisions as
Parent and the Surviving Corporation may reasonably specify) for use in such exchange. Each holder of shares of Company Common Stock
that have been converted into the right to receive the Merger Consideration shall be entitled to receive the Merger Consideration into
which such shares of Company Common Stock have been converted pursuant to Section 2.1(b) in respect of the Company Common Stock represented
by a Certificate or Book-Entry Share, and any cash in lieu of fractional shares which the holder has the right to receive pursuant to
Section 2.1(e) upon: (i) surrender to the Exchange Agent of a Certificate; or (ii) receipt of an “agent’s message”
by the Exchange Agent (or such other evidence, if any, of transfer as the Exchange Agent may reasonably request) in the case of Book-Entry
Shares; in each case, together with a duly completed and validly executed letter of transmittal and such other documents as may reasonably
be requested by the Exchange Agent. No interest shall be paid or accrued upon the surrender or transfer of any Certificate or Book-Entry
Share. Upon payment of the Merger Consideration pursuant to the provisions of this Article II, each Certificate or Certificates or Book-Entry
Share or Book-Entry Shares so surrendered or transferred, as the case may be, shall immediately be cancelled.
(c)
Investment of Exchange Fund. Until disbursed in accordance with the terms and conditions of this Agreement, the cash in the Exchange
Fund will be invested by the Exchange Agent, as directed by Parent or the Surviving Corporation. No losses with respect to any investments
of the Exchange Fund will affect the amounts payable to the holders of Certificates or Book-Entry Shares. Any income from investment
of the Exchange Fund will be payable to Parent or the Surviving Corporation, as Parent directs.
(d)
Payments to Non-Registered Holders. If any portion of the Merger Consideration is to be paid to any individual, corporation, limited
or general partnership, limited liability company, limited liability partnership, trust, association, joint venture, Governmental Entity,
or other entity or group (which term will include a “group” as such term is defined in Section 13(d)(3) of the Exchange Act)
(each, a “Person”) other than the Person in whose name the surrendered Certificate or the transferred Book-Entry Share,
as applicable, is registered, it shall be a condition to such payment that: (i) such Certificate shall be properly endorsed or shall
otherwise be in proper form for transfer or such Book-Entry Share shall be properly transferred; and (ii) the Person requesting such
payment shall pay to the Exchange Agent any transfer or other tax required as a result of such payment to a Person other than the registered
holder of such Certificate or Book-Entry Share, as applicable, or establish to the reasonable satisfaction of the Exchange Agent that
such tax has been paid or is not payable.
(e)
Full Satisfaction. All Merger Consideration paid upon the surrender of Certificates or transfer of Book-Entry Shares in accordance
with the terms hereof shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common
Stock formerly represented by such Certificate or Book-Entry Shares, and from and after the Effective Time, there shall be no further
registration of transfers of shares of Company Common Stock on the stock transfer books of the Surviving Corporation. If, after the Effective
Time, Certificates or Book-Entry Shares are presented to the Surviving Corporation, they shall be cancelled and exchanged as provided
in this Article II.
(f)
Termination of Exchange Fund. Any portion of the Exchange Fund that remains unclaimed by the holders of shares of Company Common
Stock six months after the Effective Time shall be returned to Parent, upon demand, and any such holder who has not exchanged shares
of Company Common Stock for the Merger Consideration in accordance with this Section 2.2 prior to that time shall thereafter look only
to Parent (subject to abandoned property, escheat, or other similar laws), as general creditors thereof, for payment of the Merger Consideration
without any interest. Notwithstanding the foregoing, Parent shall not be liable to any holder of shares of Company Common Stock for any
amounts paid to a public official pursuant to applicable abandoned property, escheat, or similar laws. Any amounts remaining unclaimed
by holders of shares of Company Common Stock two years after the Effective Time (or such earlier date, immediately prior to such time
when the amounts would otherwise escheat to or become property of any Governmental Entity) shall become, to the extent permitted by applicable
law, the property of Parent free and clear of any claims or interest of any Person previously entitled thereto.
2.3
Adjustments. Without limiting the other provisions of this Agreement, if at any time during the period between the date of this Agreement
and the Effective Time, any change in the outstanding shares of capital stock of the Company or ordinary shares in the Parent shall occur
(other than the issuance of additional shares of capital stock of the Company or Parent as permitted by this Agreement), including by
reason of any reclassification, recapitalization, stock split (including a reverse stock split), or combination, exchange, readjustment
of shares, or similar transaction, or any stock dividend or distribution paid in stock, the Exchange Ratio and any other amounts payable
pursuant to this Agreement shall be appropriately adjusted to reflect such change; provided, however, that this sentence shall not be
construed to permit Parent or the Company to take any action with respect to its securities that is prohibited by the terms of this Agreement.
2.4
Withholding Rights. Each of the Exchange Agent, Parent, Merger Sub, and the Surviving Corporation shall be entitled to deduct and
withhold from the consideration otherwise payable to any Person pursuant to this Article II such amounts as may be required to be deducted
and withheld with respect to the making of such payment under any tax laws. To the extent that amounts are so deducted and withheld by
the Exchange Agent, Parent, Merger Sub, or the Surviving Corporation, as the case may be, such amounts shall be treated for all purposes
of this Agreement as having been paid to the Person in respect of which the Exchange Agent, Parent, Merger Sub, or the Surviving Corporation,
as the case may be, made such deduction and withholding.
2.5
Lost Certificates. If any Certificate shall have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen, or destroyed and, if required by Parent, the posting by such Person of a bond,
in such reasonable amount as Parent may direct, as indemnity against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue, in exchange for such lost, stolen, or destroyed Certificate, the Merger Consideration to be paid in respect
of the shares of Company Common Stock formerly represented by such Certificate as contemplated under this Article II.
2.6
Treatment of Stock Options and other Stock-Based Compensation.
(a)
Company Stock Options. As of the Effective Time, each option to acquire shares of Company Common Stock (each, a “Company
Stock Option”) that is outstanding immediately prior to the Effective Time, whether or not then vested or exercisable, shall
be, by virtue of the Merger and without any action on the part of the holder thereof, or any other Person, be assumed by Parent and shall
be converted into a Parent Stock Option in accordance with this Section 2.6. Each such Parent Stock Option as so assumed and converted
shall continue to have, and shall be subject to, the same terms and conditions as applied to the Company Stock Option immediately prior
to the Effective Time. As of the Effective Time, each such Parent Stock Option as so assumed and converted shall be an option to acquire
that number of whole ordinary shares of Parent stock (rounded down to the nearest whole share) equal to the product of: (i) the number
of shares of Company Common Stock subject to such Company Stock Option; and (ii) the Exchange Ratio, at an exercise price per share of
Parent ordinary shares (rounded up to the nearest whole cent) equal to the quotient obtained by dividing (A) the exercise price per share
of Company Common Stock of such Company Stock Option by (B) the Exchange Ratio; provided, that the exercise price and the number of Parent
ordinary shares subject to the Parent Stock Option shall be determined in a manner consistent with the requirements of Section 409A of
the Code, and, in the case of Company Stock Options, if any, that are intended to qualify as incentive stock options within the meaning
of Section 422 of the Code, consistent with the requirements of Section 424(a) of the Code.
(b)
Company Restricted Shares. The Company shall take all requisite action so that, at the Effective Time, each share of Company Common
Stock, if any, subject to vesting, repurchase, or other lapse of restrictions (a “Company Restricted Share”) that
is outstanding under any Company Stock Plan as of immediately prior to the Effective Time shall, by virtue of the Merger and without
any action on the part of the holder thereof, be assumed by Parent and shall be converted into a restricted Parent ordinary share in
accordance with this Section 2.6. Each restricted Parent ordinary share shall continue to have and be subject to substantially the same
terms and conditions as were applicable to such Company Restricted Share immediately before the Effective Time (including vesting, repurchase,
or other lapse restrictions). As of the Effective Time, each such holder of Company Restricted Shares so assumed and converted will receive
that number of whole restricted Parent ordinary shares equal to the product (rounded down to the nearest whole number) of: (i) the number
of shares of Company Restricted Shares held by that holder as of immediately prior to the Effective Time; and (ii) the Exchange Ratio.
(c)
Resolutions and Other Company Actions. At or prior to the Effective Time, the Company, the Company Board, and the compensation
committee of such board, as applicable, shall adopt any resolutions and take any actions that may be necessary to effectuate the provisions
of paragraphs Section 2.6(a) and Section 2.6(b) of this Section 2.6.
(d)
Parent Actions. At or prior to the Effective Time, Parent shall take all such actions as may be necessary to allow for the issuance
of a number of ordinary shares in the Parent at least equal to the number of ordinary shares in the Parent that will be subject to Parent
equity awards as a result of the actions contemplated by this Section 2.6.
2.7
Dissenters’ Rights. Dissenting shareholders of Company shall have the dissenters rights accorded to them under the NRS. All
amounts that are finally determined to be due to holders of issued and outstanding Company Shares pursuant to statutory dissenters’
rights effectively exercised by them shall be paid by the Surviving Corporation. The holders of Company Shares shall be advised of their
statutory dissenters’ rights and provided a copy of the statutes setting forth their dissenters rights as set forth in the NRS.
Any Company Shares held by a holder that did not vote or consent in writing to the Merger and who properly demands payment for their
Company Shares in accordance with the NRS (each a “Dissenting Shareholder”) shall not be converted as set forth in
Section 2.1 above, but instead shall be converted into the right to receive consideration to be due to a Dissenting Shareholder pursuant
to the NRS, unless such holder fails to protect or withdraws or otherwise loses his dissenters’ rights. In the event that any dissenters’
rights are not exercised by a holder of the Company Shares, are otherwise not prosecuted to a conclusion, or are dismissed for any other
reason then, and in that event, the holder of such Company Shares shall no longer be deemed to a Dissenting Shareholder and such holder’s
Company Shares shall be deemed to have been converted at the Effective Time as set forth in Section 2.1 above.
ARTICLE
III.
Company REPRESENTATIONS AND WARRANTIES
3.1
Company Representations and Warranties. Company represents and warrants to Parent as follows:
(a)
Company is a corporation duly organized and validly existing under the laws of the State of Nevada and is in good standing.
(b)
As of the date hereof:
(i)
the authorized capital of Company consists of 10,000,000,000 shares of common stock, par value $0.001 per share, and 500,000,000 shares
of preferred stock, par value $0.001 per share.
(ii)
542,716,844 shares of Company common stock were issued and outstanding and no shares of Company preferred stock were issued and outstanding;
and
(iii)
Company has outstanding: (i) finance options to acquire 5,085,001,500
shares of common stock; and (ii) compensatory incentive options to acquire 362,000,000 shares of common stock, and except for such obligations
has no other options, warrants or other convertible securities issued or outstanding to acquire shares of Company common stock.
(c)
The Company Board, by consent resolutions duly adopted and not subsequently rescinded or modified in any way, has duly (i) determined
that this Agreement and the Merger are fair to and in the best interests of the Company and its stockholders, (ii) approved this Agreement
and the Merger and declared their advisability, (iii) recommended that the shareholders of the Company approve and adopt this Agreement
and approve the Merger; and (iv) directed that this Agreement and the transactions contemplated hereby be submitted for consideration
and approval by the Company’s stockholders via consent resolutions in lieu of a meeting, such minutes to be executed by a majority
of the votes entitled to be cast at a meeting held for the purpose of approving the Agreement and the Merger.
(d)
Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated hereby; the execution and delivery of this Agreement by Company and the consummation by Company
of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action, and no other corporate
proceedings on the part of Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby (other
than, with respect to the Merger, the approval and adoption of this Agreement by the holders of a majority of the then-outstanding shares
of Company common stock and the filing and recordation of appropriate merger documents as required by the NRS); this Agreement has been
duly and validly executed and delivered by Company and, assuming the due authorization, execution and delivery by Parent and Merger Sub,
constitutes a legal, valid and binding obligation of Company, enforceable against Company in accordance with its terms, subject to the
effect of any applicable bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting creditors’ rights generally and subject to the effect of general principles of equity (regardless
of whether considered in a proceeding at law or in equity. To the knowledge of Company, no state takeover statute is applicable to the
Merger or the other transactions contemplated by this Agreement.
(e)
Neither the execution and delivery of this Agreement nor the consummation of the Merger will conflict with, result in a breach of or
accelerate the performance required by any agreement to which Company is a party, or any law, rules or regulations to which Company or
its properties is subject.
ARTICLE
IV.
Parent AND MERGER SUB REPRESENTATIONS AND WARRANTIES
4.1
Parent and Merger Sub Representations and Warranties. Parent and Merger Sub represent and warrant to Company as set forth below:
(a)
Parent is a private company limited by shares duly organized, validly existing, and in good standing under the laws of Singapore.
(b)
Merger Sub is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware.
(c)
As of the date hereof:
(i)
one (1) ordinary share of Parent was issued and outstanding;
(ii)
Parent has no options, warrants or other convertible securities issued or outstanding;
(iii)
the authorized capital of Merger Sub consists of one thousand (1,000) shares of common stock, par value $0.001 per share. As of the date
of this Agreement, one thousand (1,000) shares of common stock of Merger Sub are issued and outstanding, and held of record by Parent;
and
(iv)
Merger Sub has no options, warrants or other convertible securities issued or outstanding.
(d)
The ordinary shares of Parent issuable as the Merger Consideration will, upon their issuance, be validly issued and outstanding, fully
paid and non-assessable ordinary shares of Parent.
(e)
The Parent Board, by consent resolutions duly adopted and not subsequently rescinded or modified in any way, has duly (i) determined
that this Agreement and the Merger are in the best interests of Parent and its shareholders, and (ii) approved this Agreement, the Merger
and the issuance of the Merger Consideration, (iii) recommended that the sole shareholder of Parent approve and adopt this Agreement
and approve the Merger; and (iv) directed that this Agreement and the transactions contemplated hereby be submitted for consideration
and approval by the sole shareholder of Parent at an Extraordinary General Meeting of the Company held for the purpose of approving the
Agreement and the Merger.
(f)
Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby; the execution and delivery of this Agreement by Parent and Merger Sub
and the consummation by Parent and Merger Sub of the transactions contemplated hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of Parent or Merger Sub are necessary to authorize this Agreement or
to consummate the transactions contemplated hereby (other than with respect to the Merger, the approval and adoption of this Agreement
by the sole shareholder of Parent and the filing and recordation of appropriate merger documents as required by the NRS and the DGCL);
this Agreement has been duly and validly executed and delivered by Parent and Merger Sub and, assuming due authorization, execution and
delivery by Company, constitutes a legal, valid and binding obligation of each of Parent and Merger Sub, enforceable against each of
Parent and Merger Sub in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency (including, without
limitation, all applicable laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting creditors’
rights generally and subject to the effect of general principles of equity (regardless of whether considered in a proceeding at Law or
in equity).
(g)
Neither the execution and delivery of this Agreement nor the consummation of the Merger will conflict with, result in a breach of or
accelerate the performance required by any agreement to which Parent is a party, or any law, rules or regulations to which Parent is
subject.
ARTICLE
V.
COVENANTS
5.1
Approvals. Company, Parent, and Merger Sub each covenant and agree to use all reasonable commercial efforts to obtain as soon as
practicable any required regulatory and stockholder approvals.
5.2
Interim Covenants. Each of Company, Parent, and Merger Sub agree that from the date hereof until completion of the Merger or termination
of this Agreement it will:
(a)
Comply with all requirements which applicable law may impose on it with respect to the Merger.
(b)
Use commercially reasonable efforts to obtain any waivers, consents and approvals from other parties to loan agreements, leases or other
contracts or from such applicable governmental or regulatory bodies required to be obtained by it to consummate the transactions contemplated
hereby.
(c)
Company, Parent, and Merger Sub shall take all such steps and may reasonably be required to cause the transactions contemplated by Article
II and any other disposition of Company equity securities (including derivative securities) or acquisitions of Parent equity securities
(including derivative securities) in connection with this Agreement by each individual who (i) is a director or officer of Company, or
(ii) at the Effective Time, is or will become a director of Parent, to be exempt under Rule 16b-3 promulgated under the Securities Exchange
Act of 1934, as amended.
(d)
Will cooperate and assist the other parties hereto in such other ways to the extent practicable to implement the Merger on the terms
set forth herein.
5.3
Further Assurances. At and after the Effective Time, the officers and directors of the Surviving Corporation shall be authorized
to execute and deliver, in the name and on behalf of Company or Merger Sub, any deeds, bills of sale, assignments or assurances and to
take and do, in the name and on behalf of Company or Merger Sub, any other actions and things to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets
of Company acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger. Upon the terms
and subject to the conditions of this Agreement, each of the parties hereto shall (i) make promptly its respective filings, and thereafter
make any other required submissions, under applicable laws with respect to the Merger and the other transactions contemplated hereby
and (ii) use its reasonable best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws or otherwise to consummate and make effective the Merger and the other transactions
contemplated hereby, including, without limitation, using its reasonable best efforts to obtain all permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties to contracts with the Company or Parent as are necessary for the consummation
of the Merger and the other transactions contemplated hereby.
5.4
Plan of Reorganization. Subject to the impact of Section 367 of the Code on U.S. stockholders, this Agreement is intended to constitute
a “plan of reorganization” within the meaning of section 1.368-2(g) of the income tax regulations promulgated under the Code.
From and after the date of this Agreement and until the Effective Time, each party hereto shall use its reasonable best efforts to cause
the Merger to qualify, and will not knowingly take any action, cause any action to be taken, fail to take any action or cause any action
to fail to be taken which action or failure to act could prevent the Merger from qualifying, as a reorganization within the meaning of
Section 368(a) of the Code. Following the Effective Time, neither the Surviving Corporation, Parent nor any of their affiliates shall
knowingly take any action, cause any action to be taken, fail to take any action or cause any action to fail to be taken, which action
or failure to act could cause the Merger to fail to qualify as a reorganization within the meaning of Section 368(a) of the Code.
ARTICLE
VI.
CONDITIONS
6.1
Mutual Conditions. Completion of the Merger is subject to the fulfillment, or waiver by the party entitled to the benefit of the
condition, of the conditions precedent set forth in this Article VI. The parties hereto will use all reasonable commercial efforts to
satisfy or cause to be satisfied all the conditions precedent that are set forth in this Article VI, and will use all commercially reasonable
efforts to complete the Merger as promptly as possible.
The
obligations of each of Company, Parent, and Merger Sub to complete the Merger will be subject to the following conditions precedent:
(a)
This Agreement and the Merger shall have been approved and adopted by the requisite affirmative vote of the shareholders of Company in
accordance with the NRS and Company’s Articles of Incorporation.
(b)
The receipt of all required consents and approvals to the Merger.
(c)
The registration statement on Form F-4 filed with the Securities and Exchange Commission by Parent in connection with the offer and issuance
of the ordinary shares in the Parent pursuant to the Merger, shall have become effective under the Securities Act of 1933, as amended,
and no stop order with respect thereto shall be in effect.
(d)
An amendment to the constitution of Parent shall have been adopted by the directors and shareholders of Parent, and all other actions
required under the laws of Singapore shall have been taken to convert Parent from a private company limited by shares to a public company
limited by shares.
(e)
The ordinary shares in the Parent to be issued pursuant to the Merger shall have been authorized for listing on the OTCQB, subject to
any applicable notices of issuance or other standard conditions.
(f)
No provision of any applicable law shall be in effect, and no judgment, injunction, order or decree shall have been entered since the
date of this Agreement and shall be in effect, that makes the Merger illegal or otherwise restrains, enjoins or otherwise prohibits the
consummation of the Merger, except where the violation of such law, judgment, injunction, order or decree that would occur if the Merger
were consummated would not have a material adverse effect on Company or Parent respectively.
6.2
Additional Conditions to the Obligations of Parent and Merger Sub. Each of Parent’s and Merger Sub’s obligations to complete
the Merger will be subject to the following conditions precedent:
(a)
The representations and warranties of Company in this Agreement shall be true and correct in all material respects as of the date of
this Agreement and at the time of closing of the Merger.
(b)
Company shall have complied with and duly performed in all material respects its covenants in this Agreement.
(c)
The board of directors of Company shall have adopted all necessary resolutions, and all other necessary corporate action shall have been
taken by Company to permit the completion of the Merger.
(d)
There shall have been no adverse material change in the business and affairs of Company, or any event, occurrence or development, which
would materially and adversely affect the ability of Company to complete the Merger.
(e)
Holders of no more than 1% of the outstanding shares of Company Common Stock as of immediately prior to the Effective Time, in the aggregate,
shall have exercised, or remain entitled to exercise, statutory dissenters’ rights pursuant to the NRS with respect to such shares
of Company Common Stock.
6.3
Additional Conditions to the Obligations of Company. Company’s obligation to complete the Merger will be subject to the following
conditions precedent:
(a)
The representation and warranties of Parent and Merger Sub in this Agreement shall be true and correct in all material aspects as of
the date of this Agreement and at the time of closing of the Merger.
(b)
Each of Parent and Merger Sub shall have complied and duly performed in all material respects with its covenants in this Agreement.
(c)
The board of directors of each of Parent and Merger Sub, and Parent, as the sole shareholder of Merger Sub, shall have adopted all necessary
resolutions, and all other necessary corporate action shall have been taken by Parent and Merger Sub to permit the completion of the
Merger.
ARTICLE
VII.
TERMINATION
7.1
Termination. This Agreement may be terminated:
(a)
By the consent of each of Company, Parent, and Merger Sub (without the need for any action on the part of their respective shareholders).
(b)
By Company if the Company shareholders shall not have approved the Merger by the requisite vote by written consent prior to the Closing
Date.
(c)
Upon notice by one party to the other if there shall be passed any law or regulation that makes consummation of the transaction contemplated
herein illegal or otherwise prohibited or if any injunction, order or decree enjoining Company, Parent, or Merger Sub from consummating
the transactions contemplated herein is entered and such injunction, order or decree has become final and without right of appeal.
(d)
Upon notice by Company to Parent and Merger Sub if any condition for the benefit of Company set forth in Article VI (including mutual
conditions) has not been satisfied or waived by Company.
(e)
Upon notice by Parent or Merger Sub to Company if any condition for the benefit of Parent set forth in Article VI (including mutual conditions)
has not been satisfied or waived by Parent.
ARTICLE
VIII.
GENERAL
8.1
Binding Agreement; No Third Party Beneficiaries. This Agreement shall be binding upon and shall inure to the benefit of and be enforceable
by the parties hereto and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended
to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
8.2
Time. Time is of the essence of this Agreement.
8.3
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada.
8.4
Waiver of Jury Trial. Each of the parties hereto hereby waives to the fullest extent permitted by applicable law any right it may
have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement
or the transactions contemplated hereby.
8.5
Interpretation; Construction.
(a)
The headings herein are for convenience of reference only, do not constitute part of this Agreement and shall not be deemed to limit
or otherwise affect any of the provisions hereof. Where a reference in this Agreement is made to a Section, such reference shall be to
a Section of this Agreement unless otherwise indicated. Whenever the words “include,” “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” A reference in this Agreement
to $ or dollars is to U.S. dollars. The words “hereof”, “herein” and “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(b)
The parties have participated jointly in negotiating and drafting this Agreement. In the event that an ambiguity or a question of intent
or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof
shall arise favoring or disfavoring any party by virtue of the authorship of any provision of this Agreement.
8.6
Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter of this Agreement
and supersedes all other prior agreements and understandings, both written and oral, among the parties to this Agreement with respect
to the subject matter of this Agreement. In the event of any inconsistency between the statements in the body of this Agreement and the
disclosure schedules (other than an exception expressly set forth as such disclosure schedules), the statements in the body of this Agreement
will control.
8.7
Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such
term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable,
the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely
as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated
to the greatest extent possible.
8.8
Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. No party may assign its rights or obligations hereunder without the prior written consent of the other parties,
which consent shall not be unreasonably withheld or delayed. No assignment shall relieve the assigning party of any of its obligations
hereunder.
8.9
Remedies. Except as otherwise provided in this Agreement, any and all remedies expressly conferred upon a party to this Agreement
will be cumulative with, and not exclusive of, any other remedy contained in this Agreement, at law or in equity. The exercise by a party
to this Agreement of any one remedy will not preclude the exercise by it of any other remedy.
8.10
Further Assurances. Each party hereto shall, from time to time, and at all times hereafter, at the reasonable request of the other
parties hereto, but without further consideration, do all such further acts and execute and deliver all such further documents and instruments
as shall be reasonably required in order to fully perform and carry out the terms and intent hereof.
8.11
Counterparts. This Agreement may be signed in one or more counterparts, originally or by facsimile, each such counterpart taken together
will form one and the same agreement and when delivered to the parties hereto by facsimile or by electronic mail in “portable document
format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance
of a document, or by a combination of such means, shall constitute one and the same instrument. Any party may enter into this Agreement
by manually signing any such counterpart transmitted electronically or by facsimile or other electronic signature (such as AdobeSign
or DocuSign) by any of the parties to any other party and the receiving party may rely on the receipt of such document so executed and
delivered by facsimile or other electronic means as if the original had been received. Such signatures executed by way of facsimile or
other electronic means (such as AdobeSign or DocuSign) shall be recognized and construed as secure electronic signatures and the Parties
accordingly shall deem such signatures to be original signatures for all purposes. Delivery of a counterpart of the Agreement by email
attachment shall be an effective mode of delivery.
[Signature
Page Follows]
IN
WITNESS WHEREOF, Company, Parent and Merger Sub have caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
ALR
Technologies Inc.
By:
/s/ Sidney Chan
Sidney
Chan, CEO
ALR
Technologies SG Pte. Ltd.
By:
/s/ Sidney Chan
Sidney
Chan, Director
ALRT
Delaware, Inc.
By:
/s/ Sidney Chan
Sidney
Chan, CEO
Annex
B
RIGHTS
OF DISSENTING OWNERS
NRS
92A.300 Definitions. As used in NRS 92A.300 to 92A.500,
inclusive, unless the context otherwise requires, the words and terms defined in NRS 92A.305 to
92A.335, inclusive, have the meanings ascribed to them in those sections.
(Added
to NRS by 1995, 2086)
NRS
92A.305 “Beneficial stockholder” defined. “Beneficial stockholder” means a person who is a beneficial owner
of shares held in a voting trust or by a nominee as the stockholder of record.
(Added
to NRS by 1995, 2087)
NRS
92A.310 “Corporate action” defined. “Corporate action” means the action of a domestic corporation.
(Added
to NRS by 1995, 2087)
NRS
92A.315 “Dissenter” defined. “Dissenter” means a stockholder who is entitled to dissent from a domestic corporation’s
action under NRS 92A.380 and who exercises that right when and in the manner required by NRS
92A.400 to 92A.480, inclusive.
(Added
to NRS by 1995, 2087; A 1999, 1631)
NRS
92A.320 “Fair value” defined. “Fair value,” with respect to a dissenter’s shares, means the value of
the shares determined:
1.
Immediately before the effectuation of the corporate action to which the dissenter objects, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be inequitable;
2.
Using customary and current valuation concepts and techniques generally employed for similar businesses in the context of the transaction
requiring appraisal; and
3. Without
discounting for lack of marketability or minority status.
(Added
to NRS by 1995, 2087; A 2009, 1720)
NRS
92A.325 “Stockholder” defined. “Stockholder” means a stockholder of record or a beneficial stockholder of
a domestic corporation.
(Added
to NRS by 1995, 2087)
NRS
92A.330 “Stockholder of record” defined. “Stockholder of record” means the person in whose name shares are
registered in the records of a domestic corporation or the beneficial owner of shares to the extent of the rights granted by a nominee’s
certificate on file with the domestic corporation.
(Added
to NRS by 1995, 2087)
NRS
92A.335 “Subject corporation” defined. “Subject corporation” means the domestic corporation which is the
issuer of the shares held by a dissenter before the corporate action creating the dissenter’s rights becomes effective or the surviving
or acquiring entity of that issuer after the corporate action becomes effective.
(Added
to NRS by 1995, 2087)
NRS
92A.340 Computation of interest. Interest payable pursuant to NRS 92A.300 to 92A.500,
inclusive, must be computed from the effective date of the action until the date of payment, at the rate of interest most
recently established pursuant to NRS 99.040.
(Added
to NRS by 1995, 2087; A 2009, 1721)
NRS
92A.350 Rights of dissenting partner of domestic limited partnership. A partnership agreement of a domestic limited partnership or,
unless otherwise provided in the partnership agreement, an agreement of merger or exchange, may provide that contractual rights with
respect to the partnership interest of a dissenting general or limited partner of a domestic limited partnership are available for any
class or group of partnership interests in connection with any merger or exchange in which the domestic limited partnership is a constituent
entity.
(Added
to NRS by 1995, 2088)
NRS
92A.360 Rights of dissenting member of domestic limited-liability company. The articles of organization or operating agreement of
a domestic limited-liability company or, unless otherwise provided in the articles of organization or operating agreement, an agreement
of merger or exchange, may provide that contractual rights with respect to the interest of a dissenting member are available in connection
with any merger or exchange in which the domestic limited-liability company is a constituent entity.
(Added
to NRS by 1995, 2088)
NRS
92A.370 Rights of dissenting member of domestic nonprofit corporation.
1.
Except as otherwise provided in subsection 2, and unless otherwise provided in the articles or bylaws, any member of any constituent
domestic nonprofit corporation who voted against the merger may, without prior notice, but within 30 days after the effective date of
the merger, resign from membership and is thereby excused from all contractual obligations to the constituent or surviving corporations
which did not occur before the member’s resignation and is thereby entitled to those rights, if any, which would have existed if
there had been no merger and the membership had been terminated or the member had been expelled.
2.
Unless otherwise provided in its articles of incorporation or bylaws, no member of a domestic nonprofit corporation, including, but not
limited to, a cooperative corporation, which supplies services described in chapter 704 of
NRS to its members only, and no person who is a member of a domestic nonprofit corporation as a condition of or by reason of the ownership
of an interest in real property, may resign and dissent pursuant to subsection 1.
(Added
to NRS by 1995, 2088)
NRS
92A.380 Right of stockholder to dissent from certain corporate actions and to obtain payment for shares.
1.
Except as otherwise provided in NRS 92A.370 and 92A.390 and
subject to the limitation in paragraph (f), any stockholder is entitled to dissent from, and obtain payment of the fair value of the
stockholder’s shares in the event of any of the following corporate actions:
(a)
Consummation of a plan of merger to which the domestic corporation is a constituent entity:
(1) If
approval by the stockholders is required for the merger by NRS 92A.120 to 92A.160,
inclusive, or the articles of incorporation, regardless of whether the stockholder is entitled to vote on the plan of merger;
(2) If
the domestic corporation is a subsidiary and is merged with its parent pursuant to NRS 92A.180; or
(3) If
the domestic corporation is a constituent entity in a merger pursuant to NRS 92A.133.
(b) Consummation
of a plan of conversion to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests
will be converted.
(c) Consummation
of a plan of exchange to which the domestic corporation is a constituent entity as the corporation whose subject owner’s interests
will be acquired, if the stockholder’s shares are to be acquired in the plan of exchange.
(d) Any
corporate action taken pursuant to a vote of the stockholders to the extent that the articles of incorporation, bylaws or a resolution
of the board of directors provides that voting or nonvoting stockholders are entitled to dissent and obtain payment for their shares.
(e) Accordance
of full voting rights to control shares, as defined in NRS 78.3784, only to the extent provided
for pursuant to NRS 78.3793.
(f) Any
corporate action not described in this subsection pursuant to which the stockholder would be obligated, as a result of the corporate
action, to accept money or scrip rather than receive a fraction of a share in exchange for the cancellation of all the stockholder’s
outstanding shares, except where the stockholder would not be entitled to receive such payment pursuant to NRS
78.205, 78.2055 or 78.207. A dissent pursuant to this paragraph applies only to
the fraction of a share, and the stockholder is entitled only to obtain payment of the fair value of the fraction of a share.
2. A
stockholder who is entitled to dissent and obtain payment pursuant to NRS 92A.300 to 92A.500,
inclusive, must not challenge the corporate action creating the entitlement unless the action is unlawful or constitutes or
is the result of actual fraud against the stockholder or the domestic corporation.
3.
Subject to the limitations in this subsection, from and after the effective date of any corporate action described in subsection 1, no
stockholder who has exercised the right to dissent pursuant to NRS 92A.300 to 92A.500,
inclusive, is entitled to vote his or her shares for any purpose or to receive payment of dividends or any other distributions
on shares. This subsection does not apply to dividends or other distributions payable to stockholders on a date before the effective
date of any corporate action from which the stockholder has dissented. If a stockholder exercises the right to dissent with respect to
a corporate action described in paragraph (f) of subsection 1, the restrictions of this subsection apply only to the shares to be converted
into a fraction of a share and the dividends and distributions to those shares.
(Added
to NRS by 1995, 2087; A 2001, 1414, 3199;
2003, 3189; 2005, 2204; 2007, 2438; 2009, 1721; 2011, 2814; 2019,
109)
NRS
92A.390 Limitations on right of dissent: Stockholders of certain classes or series; action of stockholders not required for plan of merger;
shares of stock not issued and outstanding on date of first announcement of proposed action.
1. There
is no right of dissent pursuant to paragraph (a), (b), (c) or (f) of subsection 1 ofNRS 92A.380 in
favor of stockholders of any class or series which is:
(a) A
covered security under section 18(b)(1)(A) or (B) of the Securities Act of 1933, 15 U.S.C. § 77r(b)(l)(A) or (B), as amended;
(b) Traded
in an organized market and has at least 2,000 stockholders and a market value of at least $20,000,000, exclusive of the value of such
shares held by the corporation’s subsidiaries, senior executives, directors and beneficial stockholders owning more than 10 percent
of such shares; or
(c) Issued
by an open end management investment company registered with the Securities and Exchange Commission under the Investment Company Act
of 1940, 15 U.S.C. §§ 80a-l et seq., as amended, and which may be redeemed at the option of the holder at net asset value,
unless
the articles of incorporation of the corporation issuing the class or series or the resolution of the board of directors approving the
plan of merger, conversion or exchange expressly provide otherwise.
2. The
applicability of subsection 1 must be determined as of:
(a) The
record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon
the corporate action requiring dissenter’s rights; or
(b) The
day before the effective date of such corporate action if there is no meeting of stockholders.
3. Subsection
1 is not applicable and dissenter’s rights are available pursuant to NRS 92A.380 for
the holders of any class or series of shares who are required by the terms of the corporate action to accept for such shares anything
other than:
(a)
Cash;
(b)
Any security or other proprietary interest of any other entity, including, without limitation, shares, equity interests or contingent
value rights, that satisfies the standards set forth in subsection 1 at the time the corporate action becomes effective; or
(c)
Any combination of paragraphs (a) and (b).
4. There
is no right of dissent for any holders of stock of the surviving domestic corporation if the plan of merger does not require action of
the stockholders of the surviving domestic corporation under NRS 92A.130.
5. There
is no right of dissent for any holders of stock of the parent domestic corporation if the plan of merger does not require action of the
stockholders of the parent domestic corporation under NRS 92A.180.
6. There
is no right of dissent with respect to any share of stock that was not issued and outstanding on the date of the first announcement to
the news media or to the stockholders of the terms of the proposed action requiring dissenter’s rights.
(Added
to NRS by 1995, 2088; A 2009, 1722; 2013,
1285; 2019, 110, 2495)
NRS
92A.400 Limitations on right of dissent: Assertion as to portions only to shares registered to stockholder; assertion by beneficial stockholder.
1.
A stockholder of record may assert dissenter’s rights as to fewer than all of the shares registered in his or her name only if
the stockholder of record dissents with respect to all shares of the class or series beneficially owned by any one person and notifies
the subject corporation in writing of the name and address of each person on whose behalf the stockholder of record asserts dissenter’s
rights. The rights of a partial dissenter under this subsection are determined as if the shares as to which the partial dissenter dissents
and his or her other shares were registered in the names of different stockholders.
2. A
beneficial stockholder may assert dissenter’s rights as to shares held on his or her behalf only if the beneficial stockholder:
(a)
Submits to the subject corporation the written consent of the stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter’s rights; and
(b)
Does so with respect to all shares of which he or she is the beneficial stockholder or over which he or she has power to direct the vote.
(Added
to NRS by 1995, 2089; A 2009, 1723)
NRS
92A.410 Notification of stockholders regarding right of dissent.
1.
If a proposed corporate action creating dissenter’s rights is submitted to a vote at a stockholders’ meeting, the notice
of the meeting must state that stockholders are, are not or may be entitled to assert dissenter’s rights under NRS
92A.300 to 92A.500, inclusive. If the domestic corporation concludes that dissenter’s
rights are or may be available, a copy of NRS 92A.300 to 92A.500,
inclusive, must accompany the meeting notice sent to those stockholders of record entitled to exercise dissenter’s rights.
2. If
the corporate action creating dissenter’s rights is taken by written consent of the stockholders or without a vote of the stockholders,
the domestic corporation shall notify in writing all stockholders of record entitled to assert dissenter’s rights that the action
was taken and send them the dissenter’s notice described in NRS 92A.430.
(Added
to NRS by 1995, 2089; A 1997, 730; 2009,
1723; 2013, 1286; 2019, 111)
NRS
92A.420 Prerequisites to demand for payment for shares.
1.
If a proposed corporate action creating dissenter’s rights is submitted to a vote at a stockholders’ meeting, a stockholder
who wishes to assert dissenter’s rights with respect to any class or series of shares:
(a) Must
deliver to the subject corporation, before the vote is taken, written notice of the stockholder’s intent to demand payment for
his or her shares if the proposed action is effectuated; and
(b) Must
not vote, or cause or permit to be voted, any of his or her shares of such class or series in favor of the proposed action.
2.
If a proposed corporate action creating dissenter’s rights is taken by written consent of the stockholders, a stockholder who wishes
to assert dissenter’s rights with respect to any class or series of shares must not consent to or approve the proposed corporate
action with respect to such class or series.
3.
A stockholder who does not satisfy the requirements of subsection 1 or 2 and NRS 92A.400 is
not entitled to payment for his or her shares under this chapter.
(Added
to NRS by 1995, 2089; A 1999, 1631; 2005,
2204; 2009, 1723; 2013, 1286)
NRS
92A.430 Dissenter’s notice: Delivery to stockholders entitled to assert rights; contents.
1.
The subject corporation shall deliver a written dissenter’s notice to all stockholders of record entitled to assert dissenter’s
rights in whole or in part, and any beneficial stockholder who has previously asserted dissenter’s rights pursuant to NRS
92A.400.
2.
The dissenter’s notice must be sent no later than 10 days after the effective date of die corporate action specified in NRS
92A.380, and must:
(a) State
where the demand for payment must be sent and where and when certificates, if any, for shares must be deposited;
(b) Inform
the holders of shares not represented by certificates to what extent the transfer of the shares will be restricted after the demand for
payment is received;
(c) Supply
a form for demanding payment that includes the date of the first announcement to the news media or to the stockholders of the terms of
the proposed action and requires that the person asserting dissenter’s rights certify whether or not the person acquired beneficial
ownership of the shares before that date;
(d) Set
a date by which the subject corporation must receive the demand for payment, which may not be less than 30 nor more than 60 days after
the date the notice is delivered and state that the stockholder shall be deemed to have waived the right to demand payment with respect
to the shares unless the form is received by the subject corporation by such specified date; and
(e)
Be accompanied by a copy of NRS 92A.300 to 92A.500,inclusive.
(Added
to NRS by 1995, 2089; A 2005, 2205; 2009,
1724; 2013, 1286)
NRS 92A.440 Demand
for payment and deposit of certificates; loss of rights of stockholder; withdrawal from appraisal process.
1.
A stockholder who receives a dissenter’s notice pursuant to NRS 92A.430 and who wishes
to exercise dissenter’s rights must:
(a) Demand
payment;
(b) Certify
whether the stockholder or the beneficial owner on whose behalf he or she is dissenting, as the case may be, acquired beneficial ownership
of the shares before the date required to be set forth in the dissenter’s notice for this certification; and
(c) Deposit
the stockholder’s certificates, if any, in accordance with the terms of the notice.
2.
If a stockholder fails to make the certification required by paragraph (b) of subsection 1, the subject corporation may elect to treat
the stockholder’s shares as after-acquired shares under NRS 92A.470.
3.
Once a stockholder deposits that stockholder’s certificates or, in the case of uncertified shares makes demand for payment, that
stockholder loses all rights as a stockholder, unless the stockholder withdraws pursuant to subsection 4.
4.
A stockholder who has complied with subsection 1 may nevertheless decline to exercise dissenter’s rights and withdraw from the
appraisal process by so notifying the subject corporation in writing by the date set forth in the dissenter’s notice pursuant to
NRS 92A.430. A stockholder who fails to so withdraw from the appraisal process may not thereafter
withdraw without the subject corporation’s written consent.
5.
The stockholder who does not demand payment or deposit his or her certificates where required, each by the date set forth in the dissenter’s
notice, is not entitled to payment for his or her shares under this chapter.
(Added
to NRS by 1995, 2090; A 1997, 730: 2003,
3189; 2009, 1724)
NRS 92A.450 Uncertificated
shares: Authority to restrict transfer after demand for payment. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is received.
(Added
to NRS by 1995, 2090; A 2009, 1725)
NRS 92A.460 Payment
for shares: General requirements.
1. Except
as otherwise provided in NRS 92A.470, within 30 days after receipt of a demand for payment
pursuant to NRS 92A.440, the subject corporation shall pay in cash to each dissenter who complied
with NRS 92A.440 the amount the subject corporation estimates to be the fair value of the
dissenter’s shares, plus accrued interest. The obligation of the subject corporation under this subsection may be enforced by the
district court:
(a) Of
the county where the subject corporation’s principal office is located;
(b) If
the subject corporation’s principal office is not located in this State, in the county in which the corporation’s registered
office is located; or
(c) At
the election of any dissenter residing or having its principal or registered office in this State, of the county where the dissenter
resides or has its principal or registered office.
The
court shall dispose of the complaint promptly.
2. The
payment must be accompanied by:
(a) The
subject corporation’s balance sheet as of the end of a fiscal year ending not more than 16 months before the date of payment, a
statement of income for that year, a statement of changes in the stockholders’ equity for that year or, where such financial statements
are not reasonably available, then such reasonably equivalent financial information and the latest available quarterly financial statements,
if any;
(b) A
statement of the subject corporation’s estimate of the fair value of the shares; and
(c) A
statement of the dissenter’s rights to demand payment under NRS 92A.480 and that if
any such stockholder does not do so within the period specified, such stockholder shall be deemed to have accepted such payment in full
satisfaction of the corporation’s obligations under this chapter.
(Added
to NRS by 1995, 2090; A 2007, 2704; 2009,
1725; 2013, 1287)
NRS 92A.470 Withholding
payment for shares acquired on or after date of dissenter’s notice: General requirements.
1. A
subject corporation may elect to withhold payment from a dissenter unless the dissenter was the beneficial owner of the shares before
the date set forth in the dissenter’s notice as the first date of any announcement to the news media or to the stockholders of
the terms of the proposed action.
2. To
the extent the subject corporation elects to withhold payment, within 30 days after receipt of a demand for payment pursuant to NRS
92A.440, the subject corporation shall notify the dissenters described in subsection 1:
(a) Of
the information required by paragraph (a) of subsection 2 of NRS 92A.460;
(b) Of
the subject corporation’s estimate of fair value pursuant to paragraph (b) of subsection 2 of NRS
92A.460;
(c) That
they may accept the subject corporation’s estimate of fair value, plus interest, in full satisfaction of their demands or demand
appraisal under NRS 92A.480;
(d) That
those stockholders who wish to accept such an offer must so notify the subject corporation of their acceptance of the offer within 30
days after receipt of such offer; and
(e) That
those stockholders who do not satisfy the requirements for demanding appraisal under NRS 92A.480
shall be deemed to have accepted the subject corporation’s offer.
3. Within
10 days after receiving the stockholder’s acceptance pursuant to subsection 2, the subject corporation shall pay in cash the amount
offered under paragraph (b) of subsection 2 to each stockholder who agreed to accept the subject corporation’s offer in full satisfaction
of the stockholder’s demand.
4. Within
40 days after sending the notice described in subsection 2, the subject corporation shall pay in cash the amount offered under paragraph
(b) of subsection 2 to each stockholder described in paragraph (e) of subsection 2.
(Added
to NRS by 1995, 2091; A 2009, 1725; 2013,
1287)
NRS 92A.480 Dissenter’s
estimate of fair value: Notification of subject corporation; demand for payment of estimate.
1. A
dissenter paid pursuant to NRS 92A.460 who is dissatisfied with the amount of the payment
may notify the subject corporation in writing of the dissenter’s own estimate of the fair value of his or her shares and the amount
of interest due, and demand payment of such estimate, less any payment pursuant to NRS 92A.460. A
dissenter offered payment pursuant to NRS 92A.470 who is dissatisfied with the offer may reject
the offer pursuant to NRS 92A.470 and demand payment of the fair value of his or her shares
and interest due.
2.
A dissenter waives the right to demand payment pursuant to this section unless the dissenter notifies the subject corporation of his
or her demand to be paid the dissenter’s stated estimate of fair value plus interest under subsection 1 in writing within 30 days
after receiving the subject corporation’s payment or offer of payment under NRS 92A.460 or
92A.470 and is entitled only to the payment made or offered.
(Added
to NRS by 1995, 2091; A 2009, 1726)
NRS 92A.490 Legal
proceeding to determine fair value: Duties of subject corporation; powers of court; rights of dissenter.
1.
If a demand for payment pursuant to NRS 92A.480 remains unsettled, the subject corporation
shall commence a proceeding within 60 days after receiving the demand and petition the court to determine the fair value of the shares
and accrued interest. If the subject corporation does not commence the proceeding within the 60-day period, it shall pay each dissenter
whose demand remains unsettled the amount demanded by each dissenter pursuant to NRS 92A.480
plus interest.
2.
A subject corporation shall commence the proceeding in the district court of the county where its principal office is located in this
State. If the principal office of the subject corporation is not located in this State, the right to dissent arose from a merger, conversion
or exchange and the principal office of the surviving entity, resulting entity or the entity whose shares were acquired, whichever is
applicable, is located in this State, it shall commence the proceeding in the county where the principal office of the surviving entity,
resulting entity or the entity whose shares were acquired is located. In all other cases, if the principal office of the subject corporation
is not located in this State, the subject corporation shall commence the proceeding in the district court in the county in which the
corporation’s registered office is located.
3.
The subject corporation shall make all dissenters, whether or not residents of Nevada, whose demands remain unsettled, parties to the
proceeding as in an action against their shares. All parties must be served with a copy of the petition. Nonresidents may be served by
registered or certified mail or by publication as provided by law.
4.
The jurisdiction of the court in which the proceeding is commenced under subsection 2 is plenary and exclusive. The court may appoint
one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers have the
powers described in tire order appointing them, or any amendment thereto. The dissenters are entitled to the same discovery rights as
parties in other civil proceedings.
5. Each
dissenter who is made a party to the proceeding is entitled to a judgment:
(a)
For the amount, if any, by which the court finds the fair value of the dissenter’s shares, plus interest, exceeds the amount paid
by the subject corporation; or
(b) For
the fair value, plus accrued interest, of the dissenter’s after-acquired shares for which the subject corporation elected to withhold
payment pursuant to NRS 92A.470.
(Added
to NRS by 1995, 2091; A 2007, 2705; 2009,
1727; 2011, 2815; 2013, 1288)
NRS 92A.500 Assessment
of costs and fees in certain legal proceedings.
1.
The court in a proceeding to determine fair value shall determine all of the costs of the proceeding, including the reasonable compensation
and expenses of any appraisers appointed by the court. The court shall assess the costs against the subject corporation, except that
the court may assess costs against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds
the dissenters acted arbitrarily, vexatiously or not in good faith in demanding payment.
2.
The court may also assess the fees and expenses of the counsel and experts for the respective parties, in amounts the court finds equitable:
(a) Against
the subject corporation and in favor of all dissenters if the court finds the subject corporation did not substantially comply with the
requirements of NRS 92A.300 to 92A.500, inclusive;
or
(b) Against
either the subject corporation or a dissenter in favor of any other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith with respect to the rights provided by NRS
92A.300 to 92A.500, inclusive.
3.
If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated,
and that the fees for those services should not be assessed against the subject corporation, the court may award to those counsel reasonable
fees to be paid out of the amounts awarded to the dissenters who were benefited.
4.
In a proceeding commenced pursuant to NRS 92A.460, the court may assess the costs against
the subject corporation, except that the court may assess costs against all or some of the dissenters who are parties to the proceeding,
in amounts the court finds equitable, to the extent the court finds that such parties did not act in good faith in instituting the proceeding.
5.
To the extent the subject corporation fails to make a required payment pursuant to NRS 92A.460, 92A.470
or 92A.480, the dissenter may bring a cause of action directly for the amount owed
and, to the extent the dissenter prevails, is entitled to recover all expenses of the suit.
6.
This section does not preclude any party in a proceeding commenced pursuant to NRS 92A.460
or 92A.490 from applying the provisions of NRS 17.117
or N.R.C.R 68.
(Added
to NRS by 1995, 2092; A 2009, 1727; 2015,
2566; 2019, 276)
Annex
C
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|
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|
UEN:
202013739N
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|
REPUBLIC
OF SINGAPORE
THE
COMPANIES ACT, CHAPTER 50
PUBLIC
COMPANY LIMITED BY SHARES
|
|
CONSTITUTION
OF
ALR
TECHNOLOGIES SG LTD.
|
|
Incorporated
on the 16th day of May 2020
Lodged
in the office of the Accounting & Corporate Regulatory Authority of Singapore
Dentons
Rodyk & Davidson LLP
80
Raffles Place
#33-00
UOB Plaza 1
Singapore
048624
G
+65 6225 2626
F
+65 6225 1838
dentons.rodyk.com |
TABLE
OF CONTENTS
HEADINGS PAGE
NAME |
1 |
REGISTERED OFFICE |
1 |
LIABILITY OF MEMBERS |
1 |
SHARE CAPITAL |
1 |
OBJECTS AND POWERS |
1 |
PRELIMINARY |
2 |
PUBLIC COMPANY |
3 |
SHARES |
3 |
SHARE CERTIFICATES |
4 |
CALLS |
4 |
FORFEITURE OF SHARES |
5 |
LIEN ON SHARES |
6 |
TRANSFER AND TRANSMISSION OF SHARES |
6 |
INCREASE AND REDUCTION OF CAPITAL |
8 |
SUB-DIVISION, CONSOLIDATION, CONVERSION AND REDENOMINATION |
9 |
BORROWING POWERS |
9 |
GENERAL MEETINGS |
10 |
PROCEEDINGS AT GENERAL MEETINGS |
12 |
VOTES AT GENERAL MEETING |
13 |
DIRECTORS |
14 |
POWERS OF DIRECTORS |
15 |
PROCEEDINGS OF DIRECTORS |
17 |
THE SEAL |
18 |
MINUTES |
18 |
AUTHENTICATION OF DOCUMENTS |
19 |
DIVIDENDS AND RESERVE FUND |
19 |
CAPITALISATION |
20 |
FINANCIAL STATEMENTS |
20 |
AUDIT AND AUDITORS |
21 |
SECRETARY |
21 |
NOTICE |
21 |
INDEMNITY |
23 |
WINDING UP |
23 |
THE
COMPANIES ACT, CHAPTER 50
__________
PUBLIC
COMPANY LIMITED BY SHARES
__________
CONSTITUTION
OF
ALR
TECHNOLOGIES SG LTD.
(Adopted
by Special Resolution passed on ___________________)
|
|
|
|
NAME |
|
1.
|
The
name of the Company is ALR TECHNOLOGIES SG LTD. |
Name |
|
REGISTERED
OFFICE |
|
2.
|
The
registered office of the Company is situated in the Republic of Singapore. |
Registered
Office |
|
LIABILITY
OF MEMBERS |
|
3.
|
The
liability of the member(s) is limited. |
Liability
of members |
|
SHARE
CAPITAL |
|
4.
|
The
Company shall have power to increase or reduce its capital, to consolidate or sub-divide the shares forming its original share capital
and to divide such shares into several classes with any preferential, deferred, qualified, special or other rights, privileges, conditions
or restrictions as to dividends, capital, voting or otherwise attached to them as may be determined by, or in accordance with, the
regulations for the time being of the Company. |
Share
Capital |
5.
|
The
objects of the Company are to carry on or undertake any business or activity, do any act or enter into any transaction that are not
prohibited under any law for the time being in force in the Republic of Singapore. |
General
objects |
|
The
object of the Company is to provide products and services related to diabetes care and any other activities that are not prohibited
under any law for the time being in force in the Republic of Singapore. |
Objects
and principal activities of Company |
6.
|
The
Company shall have all such powers as are permitted by law for the time being in force in the Republic of Singapore which are necessary
or conducive to the conduct, promotion or attainment of the objects of the Company. |
General
powers |
|
PRELIMINARY |
|
7.
|
No
part of the model constitutions prescribed under the Act shall apply to the Company except so far as the same are repeated or contained
in this Constitution. |
Provisions
of model constitutions shall not apply |
8.
|
In
this Constitution, the words standing in the first column of the table next hereinafter contained shall bear the meanings set opposite
to them respectively in the second column thereof, if not inconsistent with the subject or context. |
Interpretation |
|
WORDS |
MEANINGS |
|
|
The
Company |
ALR
TECHNOLOGIES SG LTD. |
|
|
The
Act |
The
Companies Act, Chapter 50, or any other statutory modification or re-enactment thereof. |
|
|
This
Constitution |
This
Constitution as originally framed or as altered from time to time by special resolution. |
|
|
The
Director(s) |
The
director(s) for the time being of the Company. A reference in this Constitution to the Directors or to any act to be done by the
Directors, shall where the Company has only one Director, be construed to be a reference to that Director, and a reference to the
doing of that act by that Director, respectively. Any act to be done by a single Director may be done by his alternate Director appointed
and acting in accordance with the provisions of this Constitution. |
|
|
The
Office |
The
registered office for the time being of the Company. |
|
|
The
Register |
The
register of members to be kept pursuant to the Act. |
|
|
The
Seal |
The
common seal of the Company. |
|
|
The
Secretary |
Any
person appointed to perform the duties of the secretary of the Company. |
|
|
Accounting
Standards |
Accounting
Standard means an accounting standard made or formulated under the Accounting Standards Act (Cap. 2B), |
|
|
Member |
A
registered holder of shares in the Company. A reference in this Constitution to the members or to any act to be done by the members,
shall where the Company has only one member, be construed to be a reference to that member, and a reference to the doing of that
act by that member, respectively. |
|
|
month |
Calendar
month. |
|
|
year |
Calendar
year. |
|
|
The
expression “paid-up” includes credited as paid-up. |
|
|
Expressions
referring to writing shall, unless the contrary intention appears, be construed as including reference to printing, lithography,
photography and any other modes of representing or reproducing words in visible form. |
|
|
Words
importing the singular number only shall include the plural number and vice versa. |
|
|
Words
importing the masculine gender only shall include the feminine gender and vice versa. |
|
|
Words
importing persons shall include corporations. |
|
|
Subject
as aforesaid, any words or expressions defined in the Act shall, where not inconsistent with the subject or context, bear the same
meaning in this Constitution. |
|
|
PUBLIC
COMPANY |
|
9.
|
The
Company is a public company limited by shares. |
Public
Company |
|
SHARES |
|
10.
|
Subject
to this Constitution, the first allotment and issue of shares shall be under the control of the Directors, who may allot or otherwise
dispose of the same to such persons on such terms and conditions and at such times as they shall think fit. |
First
allotment |
11.
|
Subject
to the Act, no shares may be issued by the Directors without the prior approval of the Company in general meeting. Without
prejudice to any special rights previously conferred on the holders of any existing shares or classes of shares but subject to the
Act, shares in the Company may be issued by the Directors and any such share may be issued with such preferred, deferred, or other
special rights, or such restrictions, whether in regard to dividend, voting, return of capital, or otherwise, as the Company may
from time to time by ordinary resolution determine |
Issue
of shares |
12.
|
The
Company may issue shares for which no consideration is payable to the Company. |
Issue
of shares for no consideration |
13.
|
Subject
to the provisions of this Constitution and the Act, any preference share may, with the sanction of an ordinary resolution, be issued
on the terms that it is, or at the option of the Company is liable, to be redeemed. |
Preference
shares |
14.
|
If
two or more persons are registered as joint holders of any share,
(a) they
shall be severally as well as jointly liable for any call or other liability in respect of such share, but any one of them may give
effectual receipts for any dividends, bonuses, or other moneys payable in respect of such shares.
(b) the
first name in the Register shall, however, as regards service of notices and delivery of certificates and dividend warrants, be deemed
to be the sole owner of such share. |
Joint
Holder of shares |
15.
|
Subject
to the provisions of this Constitution and except as required by law, the Company shall not be bound by or recognise any contingent,
future, partial or equitable interest in the nature of a trust or otherwise in any shares or any interest in any fractional part
of a share, or any other right in respect of any share, except an absolute right thereto in the person for the time being registered
as the owner thereof. |
No
trust recognised |
16.
|
No
person shall exercise any rights of a member until his name shall have been entered in the Register and he shall have paid all calls
and other moneys for the time being due and payable on any share held by him. |
Exercise
of rights of members |
17.
|
No
part of the funds of the Company shall directly or indirectly be employed by the Directors or the Company in the purchase of, or
in loans upon the security of, the Company’s shares except as allowed by law. |
Company’s
funds not to be lent on Company’s shares |
|
SHARE
CERTIFICATES |
|
18.
|
Every
member whose name has been entered in the Register shall without payment be entitled to one certificate specifying the class of shares
held by him, whether the shares are fully or partly paid up and the amount (if any) unpaid thereon, provided that in the case of
joint holders, the Company shall not be bound to issue more than one certificate to all the joint holders. The certificate shall
be signed by a Director and shall be countersigned by the Secretary or by a second Director or by some other person appointed by
the Directors for the purpose. |
Registered
member entitled to share certificate |
19.
|
If
any such certificate shall be worn out or lost, it may be renewed, in case of wearing out, on delivery up of the old certificate
and, in the case of loss, on such evidence being produced and on execution of such indemnity as the Directors may require and in
either case on payment of such sum not exceeding Two Singapore Dollars (S$2/-) as the Directors may from time to time require. |
New
certificates may be issued |
|
CALLS |
|
20.
|
Subject
to the provisions of this Constitution, all calls on shares shall be made by and at the discretion of the Directors, and shall be
payable at such times and places and by instalments or otherwise as the Directors may appoint. |
Directors
may make calls |
21.
|
When
any call is made, 14 days’ notice in writing shall be sent to every person liable to pay the same, specifying the time and
place of payment and to whom such call shall be paid. |
Notice
of calls |
22.
|
A
call shall be deemed to have been made at the time when the resolution of the Directors authorising such call was passed. |
When
call deemed made |
23.
|
Any
member may, with the sanction of the Directors and upon such terms as to payment of dividends or interest and otherwise as the Directors
shall determine, make payments in advance of calls. |
Payment
of calls in advance |
24.
|
If
before or on the day appointed for payment thereof a call payable in respect of a share is not paid, the holder for the time being
of the share shall pay interest on the amount of the call at the rate of 8% per annum from the day appointed for payment thereof
to the time of actual payment. |
Interest
on unpaid call |
25.
|
Any
sum which by the terms of issue of a share is made payable on allotment or on any fixed date shall for all purposes of the provisions
of this Constitution be deemed to be a call duly made and payable on the date for payment, and in case of non-payment the provisions
of this Constitution as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum were a call duly
made and notified as hereby provided. |
Sums
payable on allotment deemed a call |
|
FORFEITURE
OF SHARES |
|
26.
|
Whenever
the whole or any part of any call shall not have been paid on or before the day appointed for the payment thereof, the Directors
may at any time thereafter, during such time as the call or any part thereof remains unpaid, send a notice requiring payment of such
call, or such thereof as remains unpaid, together with interest at 8% per annum and any expenses that may have accrued by reason
of such non-payment by a specified day not being less than 14 days after the service of the said notice, and at the place where the
calls of the Company are usually made payable. Such notice shall state that, in the event of non-payment at or before the time and
at the place appointed, the share(s) in respect of which such calls was made will be liable to be forfeited without further notice. |
Notice
to be given of intended forfeiture |
27.
|
If
the requirements of any such notice shall not be complied with, any share in respect of which such notice has been given may, at
any time after the expiry of the period for payment required by the notice, and before the payment required by the notice has been
made, be forfeited by resolution of the Directors to that effect. Such forfeiture shall include all dividends declared
in respect of the forfeited shares and not actually paid before the forfeiture. |
On
non-compliance with notice, shares may be forfeited on resolution of Directors |
28.
|
When
any share has been forfeited in accordance with the provisions of this Constitution, notice of the forfeiture shall forthwith be
given to the holder of the share, and an entry of such notice having been given and of the forfeiture with the date thereof shall
forthwith be made in the Register opposite to the share; but the provisions of this Constitution are directory only, and no forfeiture
shall be in any manner invalidated by any omission or neglect to give notice or to make such entry as aforesaid. |
Notice
of forfeiture to be given and entered on Register |
29.
|
Every
share which shall be forfeited shall thereupon become the property of the Company, and may be either sold or re-allotted, or otherwise
disposed of either to the person who was before the forfeiture the holder thereof or entitled thereto, or to any member, upon such
terms and in such manner as the Directors shall think fit. |
Shares
forfeited belong to Company |
30.
|
Until
any share so forfeited shall be sold, re-allotted or otherwise disposed of, the forfeiture thereof may at the discretion and by resolution
of the Directors be rescinded on such terms as the Directors may think fit. |
Rescission
of forfeiture |
31.
|
Notwithstanding
any such forfeiture as aforesaid, all moneys which were owing at the time of forfeiture, whether for any call, interest or expenses,
and all interest and expenses to accrue in respect of such call after such forfeiture shall continue to be due from the person who
was liable to pay the same at the time of forfeiture or from his representatives. |
Calls
and expenses recoverable after forfeiture |
32.
|
The
forfeiture of a share shall involve the extinction at the time of forfeiture of all interest in and all claims and demands against
the Company in respect of the shares and all other rights and liabilities incidental to the share as between the shareholder whose
share is forfeited and the Company, except only such of those rights and liabilities as are by the provisions of this Constitution
expressly saved, or as are by the Act given or imposed in the case of past members. |
Consequences
of forfeiture |
33.
|
Upon
any sale or disposal after forfeiture or in purported exercise of the powers hereinafter contained or exercising a lien, the Directors
may cause the purchaser’s name to be entered in the Register in respect of the share(s) sold, and the purchaser shall not be
bound to see to the regularity of the proceedings, or to the application of the purchase money; and after his name has been entered
in the Register, the validity of the sale shall not be impeached by any person and the remedy of any person aggrieved by the sale
shall be in damages only and against the Company exclusively. |
Title
to forfeited shares |
|
LIEN
ON SHARES |
|
34.
|
Except
as prohibited by law, the Company shall have a first and paramount lien upon all the shares registered in the name of each member
(whether solely or jointly with others) for all calls upon such shares. |
Paramount
lien |
35.
|
For
the purpose of enforcing such lien, the Directors may sell the shares subject thereto to any person, but no sale shall be made until
the time for such payment, fulfilment or discharge as aforesaid shall have arrived, and notice in writing of the intention to sell
shall have been served on such member holding the shares or his representatives and default shall have been made by him or them in
payment, fulfilment or discharge of such debt, liabilities or engagements for 14 days after such notice. |
Enforcement
of lien |
36.
|
Upon
any sale being made by the Directors of any shares to satisfy the lien of the Company thereon, the proceeds shall be applied first
in the payment of all costs of such sale, next in satisfaction of the debt, obligation, engagement or liability of the member to
the Company, and the residue, if any, shall be paid to the said member or as he shall direct. |
Proceeds
of sale |
|
TRANSFER
AND TRANSMISSION OF SHARES |
|
37.
|
Subject
to the provisions of this Constitution, any member may transfer all or any of his shares by instrument in writing in any usual or
common form or in any other form which the Directors may approve and the instrument shall be executed both by or on behalf of the
transferor and the transferee, and the transferor shall remain the holder of the shares transferred until the transfer is registered
and the transferee’s name is entered in the Register. Shares of different classes shall not be comprised in the same instrument
of transfer. |
Restriction
on transfer |
38.
|
All
instruments of transfer which shall be registered shall be retained by the Company but any instrument of transfer which the Directors
may refuse to register shall (except in any case of fraud) be returned to the party presenting the same. |
Retention
of transfers |
39.
|
No
shares shall in any circumstances be transferred to any infant, bankrupt or person who is mentally disordered and incapable of managing
himself or his affairs but nothing herein contained shall be construed as imposing on the Company any liability in respect of the
registration of such transfer if the Company has no actual knowledge of the same. |
Person
under disability |
40.
|
Subject
to the provisions of paragraph 41 of this Constitution, any share may be transferred by a member to the spouse, child or parent,
brother or sister of that member, and any share of a deceased member may be transferred by his personal representatives to any widow,
widower, child or parent, brother or sister of such deceased member, and shares standing in the name of the trustees of any deceased
member may be transferred upon any change of trustees to the trustees for the time being of such will; and the rights of pre-emption
hereinbefore conferred in by provisions of this Constitution shall not arise on the occasion of any such transfer. |
Sales
to non-members |
41.
|
There
shall be no restriction on the transfer of fully paid up shares except where required by
law or by the rules, byelaws or listing rules of a stock exchange but the Directors may in
their discretion decline to register any transfer of shares upon which the Company has a
lien and in the case of shares not fully paid up may refuse to register a transfer to a transferee
of whom they do not approve. If the Directors shall decline to register any such transfer
of shares, they shall give to both the transferor and the transferee written notice of their
refusal to register as required by the Act and the listing rules of the stock exchange on
which the Company’s shares are traded.
If
the Directors shall refuse to register a transfer of any share, they shall, within one month from the date on which the application
for transfer was made, send to the transferee a notice in writing stating the facts which are considered to justify refusal and send
to both the transferor and transferee a notice of refusal as required by the Act. The Directors shall not register a transfer to
a person who is known to them to be an infant or a person of unsound mind but the Directors shall not be bound to enquire into the
age or soundness of mind of any transferee. |
Rights
to refuse registration |
42.
|
In
the case of the death of a member whose name is entered in the Register of Members, the survivor or survivors where the deceased
was a joint holder, and the legal personal representatives of the deceased where he was a sole holder, shall be the only persons
recognised by the Company as having any title to his interest in the shares; but nothing herein contained shall release the estate
of a deceased joint holder from any liability in respect of any share which had been jointly held by him with other persons. |
Death
of member |
43.
|
Any
person becoming entitled to a share in consequence of the death or bankruptcy of a member may, upon such evidence being produced
as may from time to time properly be required by the Directors and subject as hereinafter provided, elect either to be registered
himself as holder of the share or to have some person nominated by him registered as the transferee thereof, but the Directors shall,
in either case, have the same right to decline or suspend registration as they would have had in the case of a transfer of the share
by that member before his death or bankruptcy. |
Rights
to refuse registration to apply |
44.
|
If
the person so becoming entitled elects to be registered himself, he shall deliver or send to the Company a notice in writing signed
by him stating that he so elects. If he elects to have another person registered he shall testify his election by executing
to that person a transfer of the share. All the limitations, restrictions, and provisions of this Constitution relating to the right
to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the
death or bankruptcy of the member had not occurred and the notice or transfer were a transfer signed by that member. |
Restrictions
on transfer to apply |
45.
|
Where
the registered holder of any share dies or becomes bankrupt his personal representative or the assignee of his estate, as the case
may be, shall, upon the production of such evidence as may from time to time be properly required by the Directors in that behalf,
be entitled to the same dividends and other advantages, and to the same rights (whether in relation to meetings of the Company, or
to voting, or otherwise), as the registered holder would have been entitled to if he had not died or become bankrupt; and where 2
or more persons are jointly entitled to any share in consequence of the death of the registered holder they shall, for the purposes
of this paragraph, be deemed to be joint holders of the share. |
Rights
of registered member to apply |
|
INCREASE
AND REDUCTION OF CAPITAL |
|
46.
|
The
Company in general meeting may from time to time by ordinary resolution, whether all the shares for the time being shall have been
fully called up or not, issue new shares, of such issue price as the Company by the resolution authorising such increase shall direct. |
Power
to increase capital |
47.
|
The
new shares shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the general meeting
resolving upon the creation thereof shall direct and, if no direction be given, as the Directors with the like concurrence shall
determine, and in particular, such shares may be issued with a preferential, qualified, or postponed right to dividends, and in the
distribution of assets of the Company, and with a special or without any right of voting. |
On
what conditions new shares may be issued |
48.
|
If
at any time the capital, by reason of the issue of preference shares or otherwise, is divided into different classes of shares, all
or any of the rights and privileges attached to each class may be modified, commuted, abrogated or dealt with by agreement between
the Company and any member of the class, provided such agreement is confirmed by a special resolution passed at a separate meeting
of the holders of shares of that class, and all the provisions hereinafter contained as to general meetings shall mutatis mutandis
apply to every such meeting but so that the quorum thereof shall be members holding or representing by proxy two-thirds of the total
number of issued shares of the class. |
Altering
rights |
49.
|
The
Company in general meeting may, from time to time, by special resolution, reduce its capital by paying of capital or cancelling capital
which has been lost or is unrepresented by available assets or reducing the liability on the shares or in any other way whatsoever
allowed by law, as may seem expedient, and, in particular, capital may be paid off or cancelled upon the footing that the amount
may be called up again or otherwise. |
Reduction
of capital |
50.
|
The
Company may purchase or otherwise acquire ordinary shares issued by it pursuant to the relevant provisions of the Act or any other
applicable law. |
Purchase
of own shares |
|
SUB-DIVISION,
CONSOLIDATION, CONVERSION AND REDENOMINATION |
|
51. |
The
Company may, by ordinary resolution:
(a)
consolidate and divide all or any of its share capital; or
(b)
sub-divide its existing shares, or any of them, subject, nevertheless, to the provisions of the Act, and so that, as between the
resulting shares, one or more of such shares may by the resolution by which such sub-division is effected be given any preference
or advantage as regards dividend, capital, voting or otherwise over the others or any other of such shares; or
(c)
cancel the number of shares not taken or agreed to be taken by any person; or
(d)
convert its share capital or any class of shares from one currency to another currency. |
Sub-division,
consolidation, cancellation, conversion and redenomination |
52. |
The
Company may by special resolution, subject to and in accordance with the Act, convert one class of shares into another class of shares. |
Power
to convert shares |
53. |
All
provisions of this Constitution applicable to paid up shares shall apply to stock and the words share and shareholder
or similar expression herein shall include stock or stockholder. |
Interpretation |
|
BORROWING
POWERS |
|
54. |
The
Directors may, from time to time, raise or borrow or secure the payment of any sum or sums of money for the purposes of the Company. |
Powers
to borrow |
55. |
The
Directors may raise or secure the repayment of such sum or sums in such manner and upon such terms and conditions in all respects
as they think fit, and, in particular, by the issue of debentures or debenture stock of the Company, perpetual or otherwise, charged
upon or by mortgage, charge or lien of and on the undertaking or the whole or any part of the property of the Company (both present
and future), including its uncalled capital for the time being, or by making, accepting, endorsing or executing any promissory notes
or bills of exchange. |
Condition
of borrowing |
56. |
Every
debenture or other instrument for securing the payment of money may be made assignable free from any equities between the Company
and the person to whom the same may be issued. Any debenture or debenture stock, bonds or other instruments or securities may be
issued with any special privileges as to redemption, surrender, drawing, allotment of shares, attending and voting at general meetings
of the Company, appointment of Directors and otherwise. |
Securities
assignable free from equities |
57. |
The
Directors shall cause a proper register to be kept, in accordance with the Act, of all mortgages and charges specifically affecting
the property of the Company. |
Register
of Mortgage |
|
GENERAL
MEETINGS |
|
58.
|
All
annual general meetings of the Company shall be held in accordance with the provisions of the Act and at such place as the Directors
may determine. All general meetings other than the annual general meetings are called extraordinary general meetings. |
Annual
general meeting |
59.
|
An
annual general meeting shall be convened and held by the Company as far as practically possible
within the timelines provided in the Act and in such manner as provided by the provisions
of this Constitution, upon the occurrence of any of the following events (whichever is the
earliest):
(a) If
any member of the Company shall by notice or by electronic communication, sent not later than 3 months before the end of any year
require the holding of an annual general meeting in that year; or
(b) If
any member or members representing at least 5% of the total voting rights of all members having the right to vote on a resolution
at a general meeting of the Company shall, within 7 days after the text of a resolution to be passed by written means relating to
matters routinely dealt with at or to be done in relation to an annual general meeting of the Company has been sent or made accessible
to such member or members, notify the Company to hold a general meeting for that resolution; or
(c) If
any member or the auditors (if any) shall by notice to the Company, not later than 28 days from the date the financial statements,
balance-sheets, and the report of the Directors and the report, if any, of the auditors and other documents required to be annexed
to the balance sheet (collectively “the financial statements”), sent out to all persons entitled to receive notice of
general meetings of the Company, require the holding of a general meeting for the purpose of laying out the financial statements
before the Company.
Except
as provided in this paragraph 59 of this Constitution, any notice to the Company shall be signed under the hand of the member or
the auditors (if any) and the original notice sent to the Office or to such address as may be specified by the Company for that purpose.
A notice to the Company may be made by way of other means of electronic communication only if required by the Act, or if specifically
agreed between that member (or the auditors, if any) and the Company by approval of the Directors, and in all cases, subject to all
such security and identification procedures as required by the Company. |
|
60.
|
The
Directors or any Director may call an extraordinary general meeting of the Company whenever they or he/she think(s) fit. |
Directors
may call extraordinary meeting |
61.
|
The
Directors shall, on the requisition of members pursuant to paragraph 59 of this Constitution, or of members holding in the aggregate
not less than one-tenth of such paid-up capital of the Company which carry voting rights, proceed to convene an extraordinary general
meeting of the Company. Such requisition, duly signed by the requisitionists, stating fully the objects of the meeting,
shall be deposited at the Office. |
Members
may requisition extraordinary meeting |
62.
|
For
the purposes of paragraphs 59 and 61 of this Constitution, any of the Company’s paid-up capital held as treasury shares shall
be disregarded. |
|
63.
|
If
the Directors do not proceed to convene a meeting within 21 days after such deposit, the requisitionists, or any of them, holding
more than one half of the total voting rights of all of them, may themselves convene an extraordinary general meeting for the business
described in the requisition, to be held at such time, within 3 months from the date of such deposit, and at such place as they think
fit. |
If
Directors neglect to call meeting requisitionists may call it |
64.
|
If
at any such meeting a resolution requiring confirmation at another meeting is passed, the Directors shall forthwith then convene
a further extraordinary general meeting for the purpose of considering the resolution and if thought fit confirming it, and if the
Directors do not convene such further meeting within 7 days from the date of the passing of the first resolution, the requisitionists
or a majority of them in value may themselves convene the meeting. All meetings convened by the requisitionists under this paragraph
and paragraph 63 of this Constitution shall be convened in the same manner or as nearly as possible as that in which meetings are
to be convened by Directors. |
Directors
must convene confirmatory meeting or requisitionists may if in case of neglect |
65.
|
Subject
to the provisions of the Act relating to matters requiring special notice,
(a)
At least 21 days’ written notice of any general meeting at which it is proposed to pass a special resolution shall be given
to all members whose names appear on the register of members of the Company; and
(b)
at least 14 days’ prior written notice of every other general meeting of the members shall be given to all members whose names
appear on the register of members of the Company.
A
meeting of the members may be called by giving shorter notice with the written consent of the members subject to subject to the Act;
but the accidental omission to give such notice or the non-receipt of such notice by any member shall not invalidate any resolution
passed or the proceedings at any such meeting. |
Notice
of Meeting |
66.
|
All
business shall be deemed special that is transacted at an extraordinary general meeting, and also all that is transacted at an annual
general meeting with the exception of sanctioning a dividend, the consideration of the financial statements, Directors’ statement
and the Auditor’s reports, the election of Directors in the place of those retiring and the fixing of the remuneration of the
Directors and the appointment and fixing of the remuneration of the Auditors. |
Special
business |
67.
|
Any
member entitled to be present and vote at a meeting or his proxy may submit any resolution to any general meeting, provided that
at least for the prescribed time before the day appointed for the meeting he shall have served upon the Company a notice in writing
by him containing the proposed resolution, and stating his intention to submit the same. The prescribed time above-mentioned shall
be such that, between the date that the notice is served and the day appointed for the meeting, there shall be at least 15 intervening
days, and for a resolution requiring special notice under the provisions of the Act, at least 29 days. |
Members
may submit resolution to meeting on giving notice to Company |
68.
|
Upon
receipt of any such notice as mentioned in paragraph 67 of this Constitution, the Secretary shall include it in the notice of the
meeting in any case where the notice of intention is received before the notice of the meeting is issued, and shall in any other
case issue as quickly as possible to the members notice that such resolution will be proposed. |
Secretary
to give notice to members |
|
PROCEEDINGS
AT GENERAL MEETINGS |
|
69.
|
Two
members present in person or by proxy shall form a quorum but if the Company has only one member, that member shall form the quorum;
and in the event of a corporation being beneficially entitled to the whole of the issued capital of the Company, one person representing
the corporation shall be a quorum. No business shall be transacted at a general meeting unless a quorum is present when the meeting
proceeds to business. |
No
business to be transacted unless quorum present |
70.
|
Members
may participate in a meeting by means of video conference, conference telephone or other similar communication means whereby all
persons participating in the meeting can hear each other, without a member or members being in the physical presence of another member
or other members, and participation in the meeting in such manner shall be deemed to constitute presence in person at such meetings.
The meeting shall be deemed to be held at the place where the chairman of the meeting participates in the meeting. Voting may be
done verbally or otherwise by each participant according to procedures decided by the chairman of the meeting in such manner as to
permit the accurate recording of each vote. |
General
meeting by video conference or other similar communication
|
71.
|
If
within half an hour from the time appointed for the holding of a general meeting a quorum is not present, the meeting, if convened
on the requisition of members, shall be dissolved. In any other case, it shall stand adjourned to the same day in the
next week at the same time and place, and if at such adjourned meeting a quorum is not present within half an hour from the time
appointed for holding the meeting, the member or members present shall form a quorum. |
If
quorum not present meeting adjourned or dissolved |
72.
|
The
chairman of the meeting, with the consent of any meeting at which a quorum is present, may adjourn the meeting from time to time
and from place to place as the meeting shall determine. Whenever a meeting is adjourned for 10 days or more, notice of the adjourned
meeting shall be given in the same manner as of an original meeting. Save as aforesaid, the members shall not be entitled to any
notice of the adjournment or of the business to be transacted at an adjourned meeting. No business shall be transacted at an adjourned
meeting other than business which might have been transacted at the meeting from which the adjournment took place. |
Notice
of adjournment to be given |
73.
|
The
chairman (if any) of the Directors shall preside at every general meeting, but if there be no such chairman, or if at any meeting
he shall not be present within 15 minutes after the time appointed for holding the same, or shall be unwilling to act as chairman,
the members present shall choose a Director, or if no Director be present, or if all the Directors present decline to take the chair,
they shall choose some member present to be chairman of the meeting. |
Chairman
of board to preside at meeting |
74.
|
To
the extent permitted by the Act, and save in the case of a resolution for which special notice is required, any resolution of the
Company may be passed by written means in accordance with the provisions of the Act. A Special or Ordinary Resolution passed
by written means may consist of several documents in the like form each signed by one or more of the Members who have the right to
vote on that resolution at a General Meeting of the Company. |
Resolution
passed by written means |
|
VOTES
AT GENERAL MEETING |
|
75.
|
At
a general meeting, every resolution shall be decided on a show of hands by a majority of
the members present in person or by proxy and entitled to vote, unless before or upon the
declaration of the result of the show of hands a poll be demanded:-
(a)
by the chairman of the meeting;
(b)
by at least 2 members present in person or by proxy and entitled to vote;
(c)
by any member or members present in person or by proxy and representing not less than 5% of the total voting rights of all the members
having the right to vote at the meeting; or
(d)
by a member or members holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate
sum has been paid up equal to not less than 5% of the total sum paid upon all the shares conferring that right.
Unless
a poll be so demanded, a declaration by the chairman of the meeting that a resolution has been carried by a particular majority,
or lost, shall be conclusive, and an entry to that effect in the minute book of the Company shall be conclusive evidence thereof
without proof of the number or proportion of the votes recorded in favour of or against such resolution. |
How
resolution decided |
76.
|
If
a poll be demanded in the manner aforesaid it shall be taken at such meeting at which the poll is demanded without adjournment. |
Polls
to be taken at meeting |
77.
|
On
a show of hands, every member shall have one vote only. In case of a poll, every member shall have one vote for every
share held. Votes may be given, either personally or by proxy. |
Votes |
78.
|
If
any member be of unsound mind, he may vote by his committee or other legal curator, and such last mentioned persons may give their
vote either personally or by proxy. If any member is a minor, he may vote by his guardian or one of his guardians, who may give his
vote (or in the case of a written resolution, give his formal agreement) personally or by proxy. |
Votes
of lunatic members and minors |
79.
|
Save
as herein expressly provided, no person other than a member duly registered and who shall have paid everything for the time being
due from him and payable to the Company in respect of his shares shall be entitled to be present or to vote on any question personally
or by proxy at any general meeting. No member shall be entitled to vote at any general meeting in respect of any share that he has
acquired by transfer unless the transfer duly signed, witnessed and stamped of the share in respect of which he claims to vote shall
be left with the Company for registration at least 48 hours previous to the time of holding the meeting at which he proposes to vote
and shall have been registered. No person not already a member, may formally agree to any written resolution, unless the transfer
(duly signed, witnessed and stamped) of any share that he has acquired shall be left with the Company for registration and shall
have been registered. |
Members
only entitled to vote if transfers registered forty-eight hours before meeting |
80.
|
The
instrument appointing a proxy shall be in writing under the hand of the appointer. A proxy need not be a member of the
Company. |
Instrument
appointing proxy to be in writing |
81.
|
The
instrument appointing a proxy or a Power of Attorney or other authority shall be deposited at the Office at least 48 hours before
the time appointed for holding the meeting at which the person named in such instrument proposes to vote; otherwise the person so
named shall not be entitled to vote in respect of such meeting. An instrument appointing a proxy or a Power of Attorney or other
authority may also give authority to the person named in the instrument (who shall sign under hand his/her specimen signature on
the instrument) to formally agree to any written resolution of the Company, for and on behalf of the appointer, and shall be valid
for any written resolution, the text of which proposed resolution is sent by the Company to the members for formal agreement after
the date of receipt by the Company of such instrument at the registered office of the Company. |
Instrument
appointing proxy to be left at Office |
82.
|
A
vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the previous death of the principal
or revocation of the proxy or transfer of the share in respect of which the vote is given, provided that no notice in writing of
the death or revocation or transfer shall have been received at the Office at least one hour before the time fixed for holding the
meeting. |
When
vote by proxy valid though authority revoked |
83.
|
An
instrument appointing a proxy shall be in the following form or as near to it as circumstances
will admit:
ALR
TECHNOLOGIES SG LTD.
“I,
....................... of ....…............... being a member of ALR TECHNOLOGIES SG LTD. appoint ……..............
(with identification number: ………………) of .......................... with specimen signature:
……….……as my proxy, to vote for me and on my behalf at the [annual or extraordinary] general meeting
of the Company [to be held on ............... day of ........................] and at any adjournment of such meeting and to sign
and give formal agreement, for and on my behalf, to any resolution of the Company to be passed by written means,
Signed
this ..……….... day of ..............……….”
|
Form
of Proxy |
84.
|
For
the purposes of paragraphs 69 to 83 of this Constitution, any reference to a member of a company does not include the Company itself
where it is such a member by virtue of its holding shares as treasury shares. |
|
|
DIRECTORS |
|
85.
|
Until
otherwise determined by a general meeting, the number of Directors shall not be less than
one who must be ordinarily resident in Singapore.
The
Directors may, by a majority decision, appoint any person or persons to be Directors, who shall hold office until he is removed or
the office is vacated pursuant to the provisions of this Constitution. |
Number
of Directors |
86.
|
A
Director shall not be required to hold any share qualification in the Company. |
Director’s
qualification |
87.
|
The
remuneration of Directors acting as such, (but excluding remuneration as an employee of the Company) other than the Managing Director
(or Chief Executive Officer) shall be such sums as may from time to time be decided in general meeting. All such sums shall be divided
amongst the Directors as they shall determine. |
Director’s
remuneration |
88.
|
The
office of a Director shall ipso facto be vacated:
(a) if
he is or becomes disqualified by law or by any order made under the Act;
(b) if
a receiving order is made against him or if he makes an arrangement or composition with his creditors (unless in the case of an undischarged
bankrupt, he has obtained leave of court or the permission of the Official Assignee to act as Director);
(c) if
he is found to be a lunatic or becomes of unsound mind;
(d) if
he absents himself from the meetings of the Directors during a continuous period of 6 months without special leave of absence from
the Directors and they pass a resolution that he has by reason of such absence vacated office; or
(e) if
by notice in writing he resigns his office. |
Office
of Director vacated in certain cases |
89.
|
A
Director may at any time give notice in writing to the Company of his desire to resign and such resignation shall take effect upon
the expiration of such notice. |
Directors
may resign on giving notice |
|
POWERS
OF DIRECTORS |
|
90.
|
The
business of the Company shall be managed by or under the direction of the Directors. |
Business
of Company to be managed by Directors |
91.
|
The
Directors may exercise all the powers of a company except any power that the Act or the provisions of this Constitution require the
Company to exercise in general meeting. |
|
92.
|
The
continuing Directors may act notwithstanding any vacancy in their body; provided always that in case the Directors shall or may at
any time be reduced in number for any reason to less than the number prescribed by or in accordance with the provisions of this Constitution,
it shall be lawful for the remaining Director to act as Director for the purpose of filling up vacancies in the board, but not for
any other purpose. |
Directors
may act notwithstanding vacancies, but only to fill vacancies if less than 2 |
93.
|
The
Directors may from time to time appoint one or more of their body to be the Managing Director (or Chief Executive Officer) or Managing
Directors (or Chief Executive Officers) for such period and upon such terms as they think fit, and may from time to time remove him
or them from office and appoint another or others in his or their places. The remuneration of a Managing Director (or Chief Executive
Officer), if any, may be by way of salary or commission or participation in profits or by any or all of those modes. |
Directors
may appoint Managing Directors |
94.
|
A
Managing Director (or Chief Executive Officer) shall, subject to the provisions of any contract between him and the Company, be subject
to the same provisions as to resignation and removal as the other Directors of the Company, and if he ceases to hold the office of
Director he shall ipso facto immediately cease to be a Managing Director (or Chief Executive Officer). |
Provisions
to which Managing Directors will be subject |
95.
|
The
Directors may delegate any of their powers, other than the powers to borrow and make calls, to the Managing Director (or Chief Executive
Officer) or to committees consisting of such members of their body as they think fit. The Managing Director (or Chief Executive Officer)
or any committee so formed shall in the exercise of the power so delegated conform to any regulations that may be imposed upon them
by the Directors. |
Directors
may delegate powers |
96.
|
(1)
A Director may hold any other office or place of profit under the Company (except that of
auditor) and he or any firm of which he is a member may act in a professional capacity for
the Company in conjunction with his office of Director, and on such terms as to remuneration
and otherwise as the Directors shall determine. A Director of the Company may be or become
a director or other officer of, or otherwise interested in, any company promoted by the Company
or in which the Company may be interested as vendor, purchaser, shareholder or otherwise,
and no such Director shall be accountable to the Company for any remuneration or other benefits
received by him as a director or officer of, or from his interest in, such other company
unless the Company otherwise directs.
(2)
The appointment of any Director to any executive office shall not automatically determine if he ceases to be a Director, unless the
contract or resolution under which he holds office shall expressly state otherwise, in which event such determination shall be without
prejudice to any claim for damages for breach of any contract of service between him and the Company.
(3)
The Directors may exercise the voting power conferred by the shares in any company held or owned by the Company in such manner and
in all respects as the Directors think fit in the interests of the Company (including the exercise thereof in favour of any resolution
appointing the Directors or any of them to be directors of such company or voting or providing for the payment of remuneration to
the directors of such company) and any such Director of the Company may vote in favour of the exercise of such voting powers in the
manner aforesaid notwithstanding that he may be or be about to be appointed a director of such other company. |
Holding
of
office
in other
companies
Exercise
of
voting
power |
97.
|
All
acts done bona fide by the Directors, or by a committee of Directors, or by any person acting as a Director, shall notwithstanding
it be afterwards discovered that there was some defect in the appointment of any such Director, or person acting as aforesaid, or
that they or any of them were disqualified, be as valid as if every person had been duly appointed and was qualified to be a Director. |
All
acts done by Directors to be valid |
98.
|
The
Company may exercise the powers conferred by the Act with regard to having an official seal for use in any place outside Singapore
as referred to in Section 41(7) of the Act which shall be a facsimile of the Seal with the addition on its face of the name of the
place where it is to be used and the person affixing such official seal shall, in writing under his hand, certify on the instrument
to which is it affixed the date on which and the place at which it is affixed. |
Official
Seal |
99.
|
The
Directors may from time to time by power of attorney appoint any corporation, firm, or person or body of persons, whether nominated
directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities,
and discretions (not exceeding those vested in or exercisable by the Directors under the provisions of this Constitution) and for
such period and subject to such conditions as they may think fit, and any such powers of attorney may contain such provisions for
the protection and convenience of persons dealing with any such attorney as the Directors may think fit and may also authorise any
such attorney to delegate all or any of the powers, authorities and discretions vested in him. |
Attorney |
100.
|
A
Director may, by notice in writing to the Company and subject to the approval of the board of Directors, appoint any person to be
his alternate Director. |
Alternate
Director |
101.
|
The
appointment of an alternate Director shall determine on the happening of any event which if he were a Director would cause him to
vacate such office, or if his appointor ceases to be a Director or removes the alternate from office by notice in writing to the
Company. |
|
102.
|
An
alternate Director shall (except when absent from Singapore) be entitled to receive notices of meetings of the Directors and shall
be entitled to attend and vote as a Director at any such meeting at which his appointor is not personally present and generally at
such meeting to perform all functions of his appointor as a Director. If he shall attend any such meeting as an alternate for more
than one Director, his voting rights shall be cumulative. If his appointor is for the time being absent from Singapore or temporarily
unable to act through ill health or disability, the alternate Director’s signature to any resolution in writing of the Directors
shall be as effective as the signature of his appointor. To such extent as the Directors may from time to time determine in relation
to any committees of the Directors, the foregoing provisions of this paragraph shall also apply mutatis mutandis to any meeting of
any such committee of which his appointor is a member. An alternate Director shall not (save as aforesaid) have power
to act as a Director. |
|
103.
|
An
alternate Director shall be subject to the provisions of this Constitution but he shall not be entitled to receive from the Company
in respect of his appointment as alternate Director any remuneration except only such part (if any) of the remuneration otherwise
payable to his appointor as such appointor may by notice in writing to the Company from time to time direct. |
|
104.
|
An
alternate Director shall not be taken into account in reckoning the minimum or maximum number of Directors allowed for the time being
but he shall be counted for the purpose of reckoning whether a quorum is present at any meeting of the Directors attended by him
at which he is entitled to vote. |
|
105.
|
A
Director shall continue in office until he is removed or the office is vacated pursuant to the provisions of this Constitution. |
Continuation
of office of Directors |
106.
|
The
Company may by ordinary resolution appoint or remove any Director. |
Directors
may be removed by ordinary resolution |
|
PROCEEDINGS
OF DIRECTORS |
|
107.
|
The
Directors or any committee of Directors may meet together for the dispatch of business, adjourn, and otherwise regulate their meeting
as they think fit, and determine the quorum necessary for the transaction of business. Until otherwise determined, 2 Directors
shall be a quorum but if the Company has only one Director, that Director shall form the quorum, and constitute a meeting. Questions
arising at any meeting shall be decided by a majority of votes of the Directors present, each Director having one vote. Notwithstanding
anything in this Constitution, if the Company has only one Director, the Director may pass any Directors’ resolution, by recording
the resolution and signing the record. |
Meeting
of Directors
Quorum |
108.
|
Directors
may participate in a meeting by means of video conference, conference telephone or other similar communication means whereby all
persons participating in the meeting can hear each other, without a Director or Directors being in the physical presence of another
Director or other Directors, and participation in the meeting in such manner shall be deemed to constitute presence in person at
such meetings. The meeting shall be deemed to be held at the place where the chairman of the meeting participates in the meeting.
Voting may be done verbally or otherwise by each participant according to procedures decided by the chairman in such manner as to
permit the accurate recording of each vote. |
Directors
may meet by video conference or other similar communication |
109.
|
At
the request of any Director, the Secretary shall summon a meeting of the Directors by notice served upon the several Directors. No
notice need be served on any Director absent from Singapore except that if he has appointed an alternate Director present in Singapore,
the notice shall be served on the alternate Director. |
Director
may call meeting of board |
110.
|
The
Directors or any committee of Directors shall from time to time elect a chairman who shall preside at meetings, but if no such chairman
be elected, or if at any meeting the chairman be not present within 15 minutes after the time appointed for holding the same, a substitute
for that meeting shall be appointed by such meeting. |
Chairman |
111.
|
A
resolution in writing or copies thereof signed under hand by a majority of the Directors (or their alternates), shall be as valid
and effectual as if it had been passed at a meeting of the Directors duly convened and held. Any such resolution may consist of several
documents in like form, each signed by one or more of the Directors. The expressions “in writing” and “signed”
include approval by facsimile, or electronic communication by any such director. At any one time when the Company has a sole director,
a resolution signed by that sole director shall for all purposes, be deemed to have been duly passed. |
Resolution
in writing |
|
THE
SEAL |
|
112.
|
The
Company may have a Seal. Where the Company has a Seal, the Directors shall provide for the safe custody of the Seal, which shall
only be used by the authority of the Directors or of a committee of the Directors authorised by the Directors in that behalf, and
every instrument to which the Seal is affixed shall be signed by a Director and shall be countersigned by the Secretary or by a second
Director or by some other person appointed by the Directors for the purpose. |
Custody
of Seal |
|
MINUTES |
|
113.
|
The
Directors shall cause minutes to be duly made of all appointments of officers, and the names of Directors present at each meeting
of Directors or committee of Directors, and all resolutions and proceedings of general meetings and meetings of Directors and committees
of Directors (including all written resolutions of the Company or of the Directors). Any minutes of meetings of the Directors or
any committee of Directors or the Company if purported to be signed by the chairman of such meeting or by the chairman at the next
succeeding meeting, or in the case of a written resolution of the Company, purported to be formally agreed by the requisite number
of members and in the case of a written resolution of the Directors, purported to be signed by the requisite number of Directors,
shall be receivable as prima facie evidence of the matters stated in such minutes or resolution. |
Minutes
to be made |
|
AUTHENTICATION
OF DOCUMENTS |
|
114.
|
Any
Director or Secretary or any person appointed by the Directors for the purpose shall have power to authenticate any documents affecting
the constitution of the Company and any resolutions passed by the Company or the Directors or any committee of Directors, and any
books, records, documents, financial statements or accounts relating to the business of the Company, and to certify copies thereof
or extracts therefrom as true copies or extracts; and where any books, records, documents or financial statements are not kept at
the Office, the local manager or other officer of the Company having the custody thereof shall be deemed to be a person appointed
by the Directors as aforesaid. A document purporting to be a copy of a resolution, or an extract from the minutes of a meeting, of
the Company or of the Directors or any committee which is certified as aforesaid shall be conclusive evidence in favour of all persons
dealing with the Company upon the faith thereof that such resolution has been duly passed, or as the case may be, that any minute
so extracted is a true and accurate record of proceedings at a duly constituted meeting. Any authentication or certification made
pursuant to these presents may be made by any electronic means approved by the Directors from time to time for such purpose incorporating,
if the Directors deem necessary, the use of security procedures or devices approved by the Directors. |
Power
to authenticate documents |
|
DIVIDENDS
AND RESERVE FUND |
|
115.
|
Subject
to section 403 of the Act, the Directors may with the sanction of a general meeting from time to time declare a dividend, but no
such dividend shall be payable except out of the profits of the Company. Provided that when in the opinion of the Directors the profits
of the Company permit, they may in their discretion declare and pay interim dividends. |
Dividends |
116.
|
The
Directors may, before recommending such dividend, set aside out of the profits of the Company such sum as they think proper as a
reserve fund, which shall at the declaration of the Directors be applicable for meeting contingencies, for the gradual liquidation
of any debt or liability of the Company, or for repairing or maintaining the buildings and property connected with the business of
the Company, or shall, with the sanction of the Company in general meeting, be as to the whole or in part applicable for distribution
by way of bonus among the members or employees of the Company for the time being, on such terms and in such manner as the Company
in general meeting shall from time to time determine, and the Directors may invest the sums from time to time set apart as a reserve
fund upon such securities other than the shares of the Company as they may select, with full power to employ the assets constituting
the reserve fund in the business of the Company, and without being bound to keep them separate from the other assets. |
Reserve
fund |
117.
|
The
Directors may deduct from any dividend payable to any member all such sums of money (if any) as may be due and payable by him to
the Company on any account. |
Unpaid
calls and debts may be deducted from dividends |
118.
|
Every
dividend warrant shall be sent by post to the last registered address of the member entitled thereto, and the receipt of the person
whose name at the date of the declaration of the dividend appears on the Register as the owner of the share, or, in the case of joint
holders, of the holder whose name at the date aforesaid appears first on the Register, or of any person presenting a power of attorney
from the holders of which the Company shall have had no notice of cancellation, shall be good discharge to the Company for all payments
made in respect of such share. Payment of dividend to a member may be made by the Company by any form of electronic or telegraphic
means available, including direct credit to the member’s bank account, with a notification to the member of such payment. |
Dividend
warrant to be sent to members by post |
119.
|
No
unpaid dividend, bonus or interest shall bear interest as against the Company. Payment of dividend to a member may be
made by the Company by any form of electronic or telegraphic means available, including direct credit to the member’s bank
account, with a notification to the member of such payment. |
Unpaid
dividends not to bear interest |
|
CAPITALISATION |
|
120.
|
Any
general meeting declaring a dividend or bonus may resolve that such dividend or bonus be paid wholly or in part by the distribution
of specific assets, and in particular of paid up or partly paid up shares, debentures or debenture stock of the Company, or paid
up or partly paid up shares, debentures or debenture stock of any other company, or in any one or more of such ways, and may resolve
that any moneys, investments or other assets forming part of the undivided profits of the Company standing and available for dividend
be capitalised and distributed by way of bonus amongst the members in accordance with their rights on the footing that they become
entitled thereto as capital, and that all or any part of such bonus be applied on behalf of the members in paying up in full any
unissued shares of the Company, and that such unissued shares so fully paid be distributed accordingly amongst the members in the
proportions in which they are entitled to receive dividends, and shall be accepted by them in full satisfaction of the said bonus. |
Capitalisation
of profits |
121.
|
The
Directors shall give effect to any resolution passed under the provisions of paragraph 120 of this Constitution, and where any difficulty
arises in regard to the distribution, they may settle the same as they think expedient and, in particular, may disregard fractional
entitlements or may issue fractional certificates, and may fix the value for distribution of such specific assets or any part thereof,
and may determine that cash payment shall be made to any members upon the footing of the value so fixed, in order to adjust the rights
of all parties, and may invest any such cash or specific assets in trustees upon such trusts for the persons entitled to the dividend
or bonus as may seem expedient to the Directors. Where necessary, a proper contract shall be filed in accordance with
the Act, and the Directors may appoint any person to sign such contract on behalf of the persons entitled to the dividend or bonus
and such appointment shall be effective. |
Directors
to give effect to capitalisation of profits |
122.
|
The
Company shall cause to be kept such accounting and other records as will sufficiently explain the transactions and financial position
of the Company and enable true and fair financial statements and any documents required to be attached thereto be prepared from time
to time, and shall cause to be kept in such manner as to enable them to be conveniently and properly audited. |
Financial
statements to be kept |
123.
|
The
financial statements and other records of the Company, whether in electronic form or in hard copy, shall be kept at the Office, or
at such other place or places as the Directors think fit. |
Location
of financial statements |
124.
|
The
Directors shall from time to time determine whether in any particular case or class of cases or generally, and at what times and
places and under what conditions or regulations, the financial statements and other records of the Company, or any of them, shall
be open to the inspection of members, and no member shall have any right of inspecting any financial statements and other records
of the Company, except as conferred by the Act or authorised by the Directors or by resolution of the Company in general meeting. |
Financial
statements and other records may be inspected by members |
125.
|
Subject
to any relevant exemption under the Act, at least once in every year, the Directors shall cause to be prepared and to be laid before
the Company in general meeting (unless a resolution to dispense with annual general meetings is in force) the financial statements
and other documents as required by and in accordance with the provisions of the Act and within such period as prescribed by the Act.
All such financial statements shall comply with the requirements of the Accounting Standards and give a true and fair view of the
financial position and performance of the Company, and the same shall be sent to all persons entitled to receive notice of such meeting
not less than 14 days before the date of the meeting, or if a resolution to dispense with annual general meeting is in force, not
less than 28 days before the end of the period allowed in the Act from the laying of the same. The same may be given, sent or served
using electronic communication in the manner permitted by the Act. |
Yearly
financial statements |
|
AUDIT
AND AUDITORS |
|
126.
|
An
Auditor shall be appointed and his duties regulated in accordance with the provisions of the Act. Every Auditor of the
Company shall have a right of access at all times to the accounting and other records of the Company and shall make his report as
required by the Act. |
Auditors |
|
SECRETARY |
|
127.
|
The
Directors may from time to time by resolution appoint any person or persons to be the Secretary who shall be a Singapore resident
and have the requisite knowledge, experience and qualifications prescribed by the Act and the Directors may in the manner aforesaid
remove any person so appointed from office and may appoint another person in his or her place. The Directors may also
appoint assistant or deputy secretaries. |
Secretary |
|
NOTICE |
|
128.
|
Subject
to the Act and to the foregoing provisions of this Constitution, any notice communication or other document (each a “Notice”)
may be served by the Company upon any member or a Director either personally or by sending it through the post in a prepaid letter
or by way of facsimile transmission, or by electronic mail or other electronic communication, addressed to such member or Director
at his registered address as recorded in the Register. |
How
notice to be served on members |
129.
|
Each
member and each Director shall from time to time notify in writing to the Company his address (including his facsimile number and
his electronic mailing address, if any) for the purpose of paragraph 128 of this Constitution. |
Address
for service of members |
130.
|
Any
Notice sent by post shall be deemed to have been served on the day after the envelope containing the same is posted, and in proving
such service it shall be sufficient to prove that the envelope containing the notice was properly addressed and put in the post office
box. Any Notice sent by the Company by facsimile or electronic mail or other electronic communication shall be deemed to have been
served on the day of transmission, subject to the Company’s facsimile machine generating a report confirming the successful
transmission of the entire Notice (in the case of facsimile), and no notice of undelivered mail having been received by the Company
from the server or transmitting device (in the case of electronic mail). |
When
notice by post deemed to be served |
131.
|
Any
person who, by operation of law, transfer, or other means whatsoever, shall become entitled to any share shall be bound by every
Notice in respect of such share which previously to his name and address being entered in the Register shall be duly given to the
person from whom he derives his title to such share. |
Transferees
to be bound by prior notices |
132.
|
Any
Notice delivered or sent by post to or left at the registered address of any member or otherwise served in pursuance of the provisions
of this Constitution shall, notwithstanding such member be then deceased and whether or not the Company shall have notice of his
death, be deemed to have been duly served in respect of any registered shares whether held solely or jointly with other persons by
such member until some other person be registered in his stead as the holder or joint holder thereof, and such service shall for
all purposes of the provisions of this Constitution be deemed sufficient service of such Notice or document on his executors or administrators
and all persons (if any) jointly interested with him in any share. The signature to any Notice to be given by the Company may be
written, printed or affixed by electronic means. |
Notice
valid though member deceased |
133.
|
Where
a given number of day’s notice or notice extending over any other period is required to be given, the day of service and the
day for which such Notice is given shall not be included in such number of days or other period. |
Reckoning
of time |
134.
|
Any
notification, communication, requisition, or other document (each a “Notice”) to the Company from any member or Director,
shall be actually delivered to or received by the Company at the Office or (if any) to such address as may be specified by the Company
for that purpose, and in the case of a facsimile shall be deemed to be received by the Company on the date of transmission, provided
that the sender’s facsimile machine has generated a transmission OK report for the entire Notice, and the original Notice (with
the original signature of the member or the Director, if applicable) is posted to the Company at the Office or (if any) to such address
as may be specified by the Company for that purpose, within 24 hours of transmission. |
|
|
INDEMNITY |
|
135.
|
Subject
to the provisions of and so far as may be permitted by the Act, every Director, manager, Secretary and other officer or servant of
the Company shall be indemnified by the Company against, and it shall be the duty of the Directors out of the funds of the Company
to pay, all costs, losses and expenses which any such officer or servant may incur or become liable to incur by reason of any contract
entered into or act or deed done by him as such officer or servant or in any way in the discharge of his duties, including reasonable
hotel, travelling and other expenses. |
Indemnity
by Company |
136.
|
Subject
to the provisions of and so far as may be permitted by the Act, no Director or other officer of the Company shall be liable for the
acts, receipt, neglects, or defaults of any other Director or officer, or for joining in receipt or other act for conformity, or
for any loss or expense happening to the Company through the insufficiency or deficiency of title to any property acquired by order
of the Directors for or on behalf of the Company, or for the insufficiency or deficiency of any security in or upon which any of
the monies of the Company shall be invested, or for any loss or damage arising from the bankruptcy, insolvency, or tortious act of
any person with whom monies, securities or effects shall be deposited, or for any loss or damage occasioned by any error of judgement
or oversight on his part, or for any other loss, damage or misfortune whatsoever which shall happen in the execution of the duties
of his office or in relation thereto, unless the same happens through his own wilful act, neglect or default. |
Individual
responsibility of Directors |
|
WINDING
UP |
|
137.
|
If
the Company is wound up and the assets available for distribution amongst the members as such shall be insufficient to repay the
whole of the paid-up capital of the Company, such assets shall be distributed so that, as nearly as may be, the losses shall be borne
by the members in proportion to the capital paid up or which ought to have been paid up at the commencement of the winding up on
the shares held by them respectively, and if in a winding up the assets available for distribution amongst the members shall be more
than sufficient to repay the whole of the capital paid up at the commencement of the winding up, the excess shall be distributed
amongst the members in proportion to the capital at the commencement of the winding up paid up on the shares held by them respectively.
This paragraph is to be without prejudice to the rights of the holders of shares issued upon special terms and conditions. |
Distribution
of assets |
138.
|
If
the Company is wound up, whether voluntarily or otherwise, the liquidator may, with the sanction of a special resolution, divide
amongst the members in specie or in kind the whole or any part of the assets of the Company, and may, with the like sanction, vest
the whole or any part of such in trustees upon such trusts for the benefit of the contributories or any of them as the liquidator,
with the like sanction, thinks fit. |
Distribution
of assets in specie |
|
|
|